Statement from People’s Counsel on the Public Service Commission’s order on Baltimore Gas and Electric Company’s reconciliation request for year 3 of its first multiyear rate plan
Maryland People’s Counsel David S. Lapp issued the following statement on today’s Public Service Commission decision on BGE’s reconciliation request:
We applaud today’s Public Service Commission order denying about half of Baltimore Gas and Electric’s additional rate increase of $152 million for rate year 2023 of BGE’s first multiyear rate plan (MRP)—a requested increase on top of the more than $250 million rate hike the company has already received under the MRP. The decision marks a positive development for customers suffering from BGE’s escalating gas and electric distribution rates.
Our office asked the Commission to deny BGE’s entire reconciliation request of $152 million for rate year 2023 because BGE failed to manage and contain spending within its control. Although we are disappointed that the Commission did not deny the request in full, we are relieved that the Commission took a hard look and denied a substantial portion of BGE’s request, relying in many cases on evidence we presented.
Under BGE’s first MRP, for years 2020-2023, the Commission initially approved three years of rate increases totaling $213.8 million. On top of those increases, BGE requested additional rate increases—more than doubling the amount that the Commission approved, including $152 million for 2023 alone. These numbers show that BGE’s spending forecasts cannot be trusted and that the company is failing to operate its business with the fiscal stewardship and financial prudence that its customers deserve.
The Commission’s order on BGE’s second MRP, for years 2024-2026, approved combined gas and electric rate increases of more than $400 million on top of the increases approved in its first MRP. Customers cannot sustain yearly distribution rate increases, and BGE’s gas and electric rates are already set to increase on January 1, 2026.
In 2023, BGE spent an additional $323 million on capital investments for gas and electric systems infrastructure above what the Commission had authorized, leading BGE to request $152 million more from customers in rates. BGE’s massive spending is driving up customer costs while serving the investor growth targets of its owner, Exelon Corporation.
We have shown that BGE’s electric spending is not producing corresponding benefits for reliability or resiliency for its customers, and gas infrastructure spending is driving massive rate increases that are unsustainable as gas consumption declines. All utility capital spending, once approved, remains in utility rates for decades into the future.
Companies that operate in competitive markets must economize and tighten their belts when faced with rising costs. Monopoly utilities should do the same, but BGE failed to do so, by far exceeding its Commission-approved budget, and customers are paying the consequences.
The Commission’s order today denies immediate cost recovery of about half of BGE’s request. For the costs that the Commission allowed BGE to recover, it extends the time over which BGE will recover the costs, lessening the monthly bill impact. Today’s order allows BGE to come back in future proceedings to ask for recovery of many of the costs for which the Commission denied immediate cost recovery.
We continue to evaluate the Commission’s order.
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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