Gas and electric delivery costs have skyrocketed for most Maryland utility customers, new OPC report shows
BALTIMORE – Gas and electric delivery rates for many of the state’s largest utilities have skyrocketed since 2010, with some rates increasing by multiples of two or three, a new report from the Office of People’s Counsel shows.
Customers served by the Maryland utility subsidiaries of Illinois-based Exelon Corp., in particular, have borne the brunt of massive rate hikes over the past decade. For example, Baltimore Gas & Electric’s gas delivery rates have more than tripled since 2010—nearly three times the rate of inflation, from 26 cents/therm to 85 cents/therm in 2024, OPC’s report found. Over the same period, the electric distribution rates of Exelon utilities Pepco and Delmarva Power more than doubled, rising from 2.6 cents/kWh to 6.2 cents/kWh and from 3.2 cents/kWh to 7.0 cents/kWh respectively.
“Customers of most of Maryland’s largest utilities are facing staggering levels of cost increases for the delivery of their electricity and gas,” said Maryland People’s Counsel David S. Lapp. “These increases reflect a concerted utility effort to boost profits by accelerating capital infrastructure spending—including massive spending on gas infrastructure that is at odds with State efforts to fight climate change.”
OPC’s report focuses on the amounts that utilities charge their customers for delivering electricity and gas to customers’ homes. These delivery (or distribution) charges are distinct from the supply (or commodity) charges that customers pay for supplies of electricity and gas.
The rate increases are not uniform across all Maryland utilities, as OPC’s report shows using numerous charts and figures illustrating how rates have changed over the last 10 to 15 years. For example, Potomac Edison’s rates have largely tracked inflation, rising by less than one cent, from 1.7 cents in 2010 to 2.2 cents/kWh today, compared to Pepco’s rates that have increased by more than 3.5 cents over the same period. The rates of Washington Gas, Maryland’s second largest gas utility after BGE, have also risen much more slowly than BGE’s rates; today they are about half of BGE’s rates (46 cents/therm v. 85 cents/therm).
Other than the Exelon utilities, Columbia Gas—the State’s third largest gas utility—has had the highest increase in delivery rates, with costs spiking from $0.30/therm in 2010 to $1.00/therm in 2024.
The rapidly increasing delivery rates correspond to significant increases in utility spending on capital infrastructure—such as the substations, poles, and wires of the electric utilities and the pipes of the gas utilities. These increases in utility capital spending drive up utility profits. Utilities have always been able to recover profits on their capital infrastructure spending, as the promise of profits is what attracts shareholders to help fund capital improvements. But recent polices—including the Public Service Commission’s 2020 multi-year rate plan pilot and the 2013 STRIDE statute for gas pipe replacement—allow utilities to recover costs plus profits on an accelerated basis. That accelerated recovery is attractive to utility investors and has fueled capital spending and corresponding rate increases.
“Highly profitable rate recovery mechanisms are helping drive massive rate increases and imposing significant burdens on customers,” Lapp said. “It’s past time to return to the basics of regulating utility monopolies for the public good rather than promoting strategies that place utility investor interests ahead of customer interests.”
OPC’s report recommends ending state policies that accelerate utility recovery of capital spending and increasing the transparency of customer impacts from utility rates and rate filings.
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.
* * *
|
