BGE Proposal to Electrify Homes Has No Place in BGE’s Rate Case, People’s Counsel Tells Public Service Commission
BALTIMORE – Baltimore Gas & Electric’s proposal for a sweeping electrification plan would be a costly, radical departure from the utility’s core obligation of delivering electricity and gas to its customers and should not be considered in its pending rate case, the Office of People’s Counsel explained in a motion filed today with the Public Service Commission.
BGE’s electrification proposal would allow it to earn a profit on rebates it offers to individual customers who buy new electric appliances—resulting in total costs to customers of $400 million. The proposal is part of the utility’s multi-year rate plan filed in February that, if approved, would authorize substantial increases in customer rates. (See here for more information.)
“Electrifying our buildings is essential to meet the State’s climate goals,” said People’s Counsel David S. Lapp. “But how we electrify and who pays for it are not questions that should be decided in a rate case with a small set of parties, under a tight deadline, and where the utility’s proposed strategy is the only strategy on the table.”
OPC’s filing asked the Commission to dismiss the electrification plan as inappropriate for a rate case. OPC’s filing explains that BGE’s plan would radically expand the scope of BGE’s business model from its core obligations of delivering electricity and gas to include the financing of customer-owned appliances, a role that is akin to that of a bank. The plan would come at a high cost for low-income customers, who don’t equitably benefit from rebate programs, the filing said.
OPC’s filing highlights four reasons why BGE’s electrification plan should not be part of the current rate case:
- BGE proposes major new policies for how Maryland electrifies its buildings and how much it will cost customers. Normally such issues would be heard in a policymaking docket, allowing for more time and fuller stakeholder participation.
- BGE’s proposal fits all the characteristics of an energy-efficiency program—all except for how BGE proposes that customers pay for it. BGE wants to profit from the customer rebates, which will impose much higher customer costs.
- BGE’s proposal would radically expand the scope of BGE’s business into financing customer-owned equipment. Utility financing at its “rate of return,” as BGE proposes, may be much costlier than competitive options.
- Because BGE’s proposal requires customers to maintain their natural gas heating systems, it would lock in a strategy that deepens reliance on fossil fuels—even though the State is completing a plan that is likely to recommend a different strategy. The State plan is due December 31, 2023. BGE’s proposed plan takes effect on January 1, 2024.
“BGE has proposed an electrification strategy that prioritizes the financial interests of its owner, Exelon,” Lapp said. “We need a strategy that prioritizes the State’s interests, particularly the interests of utility customers. That strategy needs to be developed in an open and transparent setting where all potential policies are on the table.”
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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