Recent utility spending on electric system infrastructure not correlated to greater reliability or system resilience, OPC analysis shows
BALTIMORE – Increased capital spending over the past five years on electric system infrastructure such as substations and power lines does not correspond to increased system reliability or resilience, an OPC analysis filed this week with the Public Service Commission shows.
“The data calls into question whether the utilities’ ongoing high levels of spending on capital infrastructure is producing meaningful benefits for customers,” said Maryland People’s Counsel David S. Lapp. “It’s time to shift focus to more targeted and lower-cost measures like vegetation management that can more meaningfully address customer concerns about outages due to major weather events, while curbing growing electric utility rates.”
OPC’s more than 50-page filing in the Commission’s reliability docket summarizes how the State’s major electric utilities met various metrics correlated with reliability, such as the average frequency and length of outages, and resilience, which measure a system’s ability to prepare for, withstand, and recover from major disruptions. Over the past decade, Maryland’s investor-owned utilities have spent hundreds of millions of dollars on capital infrastructure, contributing to top-tier national performance based on traditional reliability metrics, OPC’s comments explained.
But those capital investments come with diminishing returns, meaning that customers pay more for each infinitesimal gain in conventional reliability metrics. Despite their top performance, utilities have advocated for even higher reliability standards and used those standards to justify more capital investments, OPC explained.
The conventional reliability metrics the Commission uses fail to fully address system resilience during major events, such as extreme weather—which is what customers are most concerned about, OPC said.
OPC assessed the relationship between increased spending on capital infrastructure and reliability and resiliency metrics over the period from 2020 to 2024. OPC found increased capital spending had little to no impact on improving reliability and resiliency metrics.
OPC analyzed utility filings to measure system resilience and found that Potomac Edison, SMECO, and Delmarva Power improved their overall resilience performance over 2020-2024, but Baltimore Gas and Electric and Pepco’s resilience performance deteriorated.
The findings show that the Commission’s oversight of electric distribution system reliability requires an overhaul, OPC’s filing explains. The Commission’s evaluation framework should weigh the costs and benefits of capital investments given the diminishing benefits per dollars spent, expand the metrics utilities are required to report to include resiliency metrics, and prioritize low-cost strategies that promote resilience, like vegetation management.
Unlike capital investments, which generate utility profits, operations and maintenance costs—such as tree trimming—are recovered without a profit and don’t drive up customer bills in the way capital investments do.
“We are urging the Commission to evolve its oversight of electric distribution system reliability to place greater emphasis on cost-effective measures that address customer concerns about limiting outages during extreme weather events,” Lapp said. “That will also promote affordability by avoiding capital spending that generates minimal added customer benefits.”
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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