Absent reform, growing gas bills will continue upward spiral, new OPC report finds
BALTIMORE – Maryland’s gas utilities’ massive spending on gas infrastructure continues to accelerate, and—without a change in course—customers face significant additional increases in gas delivery rates in the coming years, according to a new report released today by the Office of People’s Counsel. Using conservative assumptions, the report projects that the State’s three largest gas utilities will spend more than $18 billion on gas infrastructure through 2043, driving up gas bills for Maryland households even higher than today’s levels.
“Many Maryland households are facing some of their highest gas bills ever this winter, largely because of a decade of massive spending on gas infrastructure,” Maryland People’s Counsel David S. Lapp said. “Unfortunately, today’s high bills are only the start. Without big changes, bills will continue to rise significantly.”
OPC’s new report, Maryland Gas Utility Spending: Projections and Analysis of Future Capital Investments, prepared by the consulting firm DHInfrastructure, updates previous reports and shows that OPC’s 2022 projections understated levels of spending and bill impacts. The report projects that if Baltimore Gas and Electric maintains its customer counts, the typical BGE residential customer who paid on average $240 per month for their winter gas bill over the years 2022-2024 will see their bill increase to more than $400 per month by 2035. With even modest declines in customer counts—expected to result from competition from modern electric appliances—average winter bills in 2035 could easily reach well above $500 per month for gas service alone.
In fact, future winter bills could be even higher than OPC projects, depending largely on gas supply costs, how much gas customers use, how well their households are weatherized, and how efficient their appliances are.
Gas utilities will spend about $744 million on gas infrastructure in 2025, the report shows—a rate of over $2 million per day. BGE’s spending accounts for about $550 million of that amount—$1.5 million each day.
Today, customers are only seeing the start of the huge bill impacts that will result from continuing business as usual, according to the report. So far, customers have only paid for a fraction of what the past decade’s spending will ultimately cost them. And BGE and Washington Gas are planning to continue their gas infrastructure replacement spending for about another 20 years. Customers today have paid only about 3 percent of the total customer cost of completing the replacement work. BGE is projected to spend about $3 billion in the future on replacing its gas system, and Washington Gas is projected to spend more than $4 billion.
“Utilities generate higher profits by spending more on infrastructure and winning the State’s approval of that spending,” Lapp said. “We know that gas appliances face emerging, stiff competition from modern electric technologies. It’s up to the State to slow the spending and avoid further bill increases.”
The report analyzed recent and planned delivery-system spending programs of BGE, Washington Gas, and Columbia Gas of Maryland, using publicly available data from various reports, as well as filings and orders of the Public Service Commission, and then made future spending projections based on that information. Among other findings, the report’s conservative calculations show that the utilities’ current spending path—if left unchanged and with no declines in how much gas is used—will result in substantial increases in the typical residential utility customer’s 2035 winter bill from 2022-2024 levels:
- BGE customers will see a 67 percent bill increase, up from $240/month to $402/month, as distribution rates nearly double from today’s rates.
- Washington Gas customers will see a 32 percent bill increase, up from $194/month to $256/month, also with a near doubling of distribution rates.
- Columbia Gas customers will see a 47 percent bill increase, up from $229/month to $337/month.
But these projected bill increases do not account for any potential decline in the number of gas utility customers. For the first time, this report ran scenarios projecting the impact on rates and bills resulting from gas customers leaving gas service by fully electrifying their appliances, while maintaining the utility revenues necessary to recover gas infrastructure costs. Assuming a conservative 10 percent reduction in customer base, here is the typical residential utility customer’s 2035 winter bill from 2022-2024 levels:
- BGE customers will see an 84 percent increase, up from $240/month to $441/month.
- Washington Gas customers will see a 41 percent increase, up from $194/month to $274/month.
- Columbia Gas customers will see a 61 percent increase, up from $229/month to $369/month.
The report also makes projections for more substantial reductions in customer accounts that show far more substantial increases in customer bills.
The report’s findings are clear: Gas bills will increase substantially from today’s levels unless action is taken to address gas infrastructure spending. Legislation now pending in the General Assembly—the Ratepayer Protection Act (House Bill 419)—seeks modest but important changes to STRIDE, the State-sanctioned gas infrastructure replacement program. HB 419 has the potential to lower gas bills by billions of dollars in the decades ahead and presents an opportunity for the General Assembly to mitigate rising gas costs in Maryland.
OPC’s report, the report’s executive summary, and a fact sheet are available on OPC’s website. OPC’s STRIDE FAQs provide further information about the State’s infrastructure replacement program, including its relation to gas distribution safety.
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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