Gas utility planning practices leave residential customers vulnerable to unnecessary rate hikes and cost risks, OPC testimony in gas proceeding says
BALTIMORE – Maryland gas utilities’ planning practices leave residential customers at risk of utility overspending on costly gas system infrastructure that will drive up rates and gas bills, the Office of People’s Counsel said in testimony filed this week in the Public Service Commission’s (PSC) case on gas utility planning, known as the “future of gas” proceeding. Utilities are not appropriately considering changing patterns of household gas consumption and lower-cost alternatives to high-cost infrastructure replacement investments, the testimony says.
“It is unreasonable for gas companies to assume that they can continue to operate as they have in the past,” said Maryland People’s Counsel David S. Lapp. “Gas utilities continue to spend tens and hundreds of millions of dollars each year on profit-enhancing, large capital investments, relying primarily on historical patterns even when gas usage per residential customer is declining and electric heating is outpacing gas heating.”
OPC submitted its testimony in a case the PSC created in response to OPC’s February 2023 petition to launch a proceeding on long-term gas system planning. As illustrated in OPC’s 2025 gas spending report, an update to its earlier reports, Maryland gas utilities are spending about $750 million a year on gas infrastructure, and even modest drops in gas consumption will drive significant increases in customer bills. Since the filing of its petition, Maryland’s gas utilities have invested more than $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.
In one of three OPC expert witness filings yesterday, an expert analyzed consumption patterns for Washington Gas, Baltimore Gas and Electric, and Columbia Gas of Maryland. Since 2000, despite increasing numbers of customers, the expert found that residential gas consumption has remained relatively stable within these utilities’ combined service territories, with a modest overall declining trend. Over that same period, per-customer, residential consumption has been steadily declining for each utility, with Washington Gas experiencing the greatest decline, the expert said, noting that the declines likely reflect a combination of factors, including energy efficiency improvements, electrification, and warmer weather trends.
Relatedly, the number of Maryland households using electricity as their primary heating source is increasing faster than the number of households using gas heating, the expert noted, likely reflecting broad market and technology developments—including improvements in cold-climate air-source heat pumps, declining equipment costs, evolving consumer preferences, and national electrification trends—foretelling a future in which gas consumption is “highly likely to decline over time.”
Despite these trends, gas companies continue to invest in gas infrastructure based on historic patterns that fail to account for the changing market and policy landscape, while the utilities also fail to adequately consider lower-cost alternatives to pipe replacement, another OPC expert explains. “Even if gas demand does not decline, improving the gas companies’ capital planning processes could avoid billions of dollars in unnecessary, excessive, or untimely investments,” the expert explains.
OPC testimony also addressed whether alternatives to fossil natural gas—“renewable natural gas” (RNG) and hydrogen—can realistically and affordably use the existing gas system to help achieve the State’s climate goals. OPC’s third expert concludes that neither RNG nor hydrogen are viable alternatives to fossil gas; neither can meaningfully assist in achieving the State’s climate goals, and each faces significant hurdles such as limited availability, technical constraints, and high costs.
OPC’s experts offer a number of recommendations for future planning, including that the PSC require utilities to recalibrate their gas demand forecasts, their capital spending plans, and their procurement practices to build in more flexibility—including comprehensive consideration of alternatives to infrastructure replacement plans—and to assess the near-term and long-term impacts of their decisions on safety, customer cost, reliability, and financial risk.
“The current business model of endless expansion and large-scale infrastructure replacement spending is no longer viable,” Lapp said. “We need more transparent and forward-looking gas planning. As current law requires, gas utilities must consider lower-cost alternatives that will reduce infrastructure overspending and save customers money, regardless of State climate policy.”
Looking ahead, public evidentiary hearings will take place in August this year, and thereafter the public (including non-parties) will have the opportunity to file comments by Sept. 28, 2026.
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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