New protections for utility customers signed into law
BALTIMORE – The pace of utility distribution rate increases could slow following the Maryland General Assembly’s successful efforts to pass legislation that became law with Governor Wes Moore’s signature today. The Office of People’s Counsel strongly supported several of the measures, including provisions addressing multiyear rate plans, gas infrastructure, and data centers.
“We applaud the General Assembly for advancing legislation with the potential to save utility customers from unnecessary rate increases in the coming years,” Maryland People’s Counsel David S. Lapp said. “The legislation has the potential to save customers tens or even hundreds of millions of dollars over time.”
These measures now move to the Public Service Commission, where proceedings to implement the legislation will determine the ultimate impacts on customer rates, and OPC will play an important advocacy role advancing residential utility customer interests.
Measures that could provide relief to customers include:
-
Conditions on the further use of multiyear rate plans (MRPs). The Public Service Commission is prohibited from approving new multiyear rate plans unless the plan demonstrates “customer benefits,” and utilities are barred from additional rate increases to compensate the utility for increases beyond the initially approved rates. BGE has pending before the Commission a request for an additional $152 million increase in rates to compensate it for excess spending in the third year of its first MRP (2023) that would be on top of its $277 million increase, while Pepco has a $30 million increase pending on top of its $52 million increase. Although the legislation does not apply to these pending requests, it would bar utilities from making similar requests in the future.
-
Gas pipeline replacement work. Modifications to the Maryland law allowing accelerated cost recovery for gas replacement infrastructure—the Strategic Infrastructure Development and Enhancement Plan (STRIDE) law—will require utilities to evaluate cost-effective alternatives to pipe replacement work, prioritize risk reduction, and provide advance notice to customers before any replacement work starts.
-
Gas infrastructure investments. Investor-owned utilities may only recover costs of gas infrastructure investments if they demonstrate customer benefits of the investment and that the company has assessed cost effective options that can defer, reduce, or eliminate the need for the investments.
-
Data center tariffs. Utilities will be required to file “tariffs”—essentially rules—that control the costs of connecting customers with electric loads of 100 megawatts or more, such as hyperscale data centers, to the electric system. The rules are intended to protect residential customers from risks and costs associated with connecting large customers to the electric system. For example, the rules must include requirements that address cancellations of data center projects that could leave customers on the hook for investments necessary to connect the proposed data center.
-
Corporate costs. Investor-owned utilities are no longer allowed to recover costs associated with membership in industry trade associations—which may advocate against the interests of ratepayers—or the use of private planes.
The gas spending measures have the potential to reduce massive gas system investments that have been driving up gas rates for many Maryland customers—for example, driving Baltimore Gas and Electric rates up threefold over a little more than a decade. This year, Maryland’s three largest gas utilities will spend approximately $750 million on gas infrastructure.
“Maximizing the legislation’s potential benefits will depend on lots of work at the Public Service Commission,” Lapp said. “We look forward to using the new tools to slow or prevent further rate increases.”
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.
* * *
|