Transparency and Oversight Needed on Federal Grants, Not Deference to Utilities, People’s Counsel Says
BALTIMORE – A Public Service Commission decision issued in response to an OPC petition improperly puts the state’s electric utilities in charge of deciding what grants to apply for under the federal Infrastructure Investment and Jobs Act (IIJA) and whether to consider input from the public and other stakeholders about how the money should be used, OPC said in a filing today. Unless it reverses its June 29, 2022, decision, the PSC will fail to meet its responsibility to regulate and supervise the utilities to make sure the state and its utility customers get maximum benefit from the billions of dollars available under the federal infrastructure bill, the filing said.
“The Commission’s job is to regulate and supervise the public utilities to make sure their IIJA grant applications are in the public interest and consistent with Maryland’s Climate Solutions Now Act,” said People’s Counsel David S. Lapp. “The June order abdicates that responsibility by giving the utilities complete discretion over what IIJA funding to apply for.”
OPC’s filing asks the PSC to reverse its June 29, 2022, order that gives utilities broad control over IIJA-related decisions with—at most—limited, after-the-fact oversight. The order lets utilities decide whether to consider comments from the public when making IIJA decisions, a responsibility that is normally the PSC’s. The order states that the PSC is not asking for comments from OPC and other parties on actions the PSC should take regarding utility IIJA efforts. The order thus undermines the ability of the public, legislators, and government agencies—including OPC, the statutory representative of utility residential customers—to influence how federal dollars can benefit Marylanders and Maryland policy.
The order was issued after OPC’s May 5, 2022, petition asking that the Commission open a “proceeding” on utility IIJA grant funding, a mechanism which generally allows OPC and interested parties to file comments and make suggestions for the Commission’s review and decision. The IIJA makes significant funding available to states for everything from utility pole upkeep and vegetation management to distribution grid enhancements and the integration of distributed energy resources, such as solar and batteries. In the Climate Solutions Now Act passed this year, the General Assembly directed the PSC to consider how IIJA grant funds can further state policies for meeting the State’s energy goals, but the PSC’s order gives the utilities no direction on how to advance CSNA policies and allows them to decide what grants to seek.
Federal grant funds can substitute for expenses that utility customers would otherwise pay, and therefore can lower customer rates. But if used for projects that utilities would undertake anyway, grant funds decrease utility earnings. Utilities thus are incentivized to not maximize federal dollars or to obtain them in ways that also increase what customers spend on capital investments. In fact, the utilities already have signaled their intent to use IIJA funding to increase customer costs. In a filing, the state’s largest utilities said that the IIJA grant efforts will involve “additional cost outlays . . . likely to be in the millions of dollars.” The PSC’s June order approved the utilities' request for special rate treatment of those costs.
“Federal grant money should reduce costs for utility customers, not increase costs,” Lapp said. “Utilities are regulated because they are monopolies. Most of Maryland’s utilities are controlled by corporate holding companies with little connection to Maryland and with obligations to shareholders, not to Maryland customers or to Maryland’s policy goals. Without effective regulation, their plans for federal grant money will prioritize those private obligations over the public interest.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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