Maryland regulators initiate long-needed formal process for gas system planning
BALTIMORE – The Maryland Public Service Commission today launched formal procedures to investigate the long-term planning practices of our gas utilities, responding to the Office of People’s Counsel’s February 2023 petition seeking to implement a planning process.
“We commend today’s order from the Commission,” said Maryland People’s Counsel David S. Lapp. “This investigation is necessary and urgent. We are hopeful that combined with near-term actions, the order will help stem unnecessary further increases in gas utility rates and customer bills.”
Gas utilities will spend about $744 million on gas infrastructure in 2025—a rate of over $2 million per day. Baltimore Gas and Electric’s spending accounts for about $550 million of that amount—spending at a rate of approximately $1.5 million each day.
That spending on gas infrastructure—pipes, gas regulators, meters, and other equipment—has driven up gas delivery rates and will continue to drive up rates if spending continues at its current pace. BGE’s gas delivery rates have more than tripled since 2010, increasing at around three times the rate of inflation, from 26 cents per therm to 90 cents per therm in 2025.
OPC released a report in February that, using conservative assumptions, showed that utility “business as usual” spending on gas infrastructure by the State’s three largest gas utilities will amount to more than $18 billion on gas infrastructure through 2043, at a cost to customers of about $35 billion after accounting for the utilities’ profit.
“Today, the State exercises little oversight over how our gas utility monopolies are planning and spending for the long term,” Lapp said. “That means utilities are left to plan their investments in ways that benefit their private interests—primarily out-of-state utility holding companies and their investors. We are hopeful that the launch of formal procedures for gas industry planning will elevate the public interest over utility profits when considering how billions of dollars are being invested for the long term.”
Since OPC filed its petition in February 2023 to launch a long-term planning proceeding, Maryland’s gas utilities have invested about $2 billion in long-lasting gas infrastructure. Most of these costs are locked into utility rates for well over 40 years and, after accounting for the utilities’ profit, ultimately cost customers three to four times more than the initial investment. The spending drives up rates and bills for Maryland customers, as we have documented in several reports since 2022.
These investments also run the risk of being “stranded” because they become uneconomic to maintain if system use declines—creating risks in the billions of dollars for customers, taxpayers, and investors. Declines in consumption mean that rates must increase—beyond the rate increases driven by massive spending itself—driving customers off the gas system to avoid higher per-therm costs and resulting in even higher costs for the customers left behind on the gas utility system. The Commission partially addressed the issue of stranded costs in its recent order terminating subsidies paid by existing ratepayers for gas-line extensions to new customers.
Today's Commission order identifies issues for investigation that are critical to the State’s economy and the welfare of utility customers. The formal process established under the order is necessary to address foreseeable declines in gas consumption due to highly efficient electric technologies, customer concerns about the health and safety of gas use, and climate policy.
“The fundamental nature of gas utility service is changing,” Lapp said. “We welcome the Commission’s order and hope that it will lead to comprehensive industry reform that benefits utility customers by lowering costs and the risks inherent in proceeding without a plan.”
For more information, see OPC’s webpage on the Future of Gas proceeding.
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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