Washington Gas not entitled to bill surcharge recovery for costs denied in rate case, OPC filing says
BALTIMORE – Maryland law prohibits Washington Gas from continuing to recover certain gas replacement infrastructure costs through a surcharge on customer bills, the Office of People’s Counsel said in a filing with the Maryland Public Service Commission yesterday. The statutory prohibition against surcharge recovery applies because, in its recent rate case, the PSC denied Washington Gas’s request to add the costs to its base rates, OPC’s filing said.
OPC’s filing stems from the PSC’s decision in Washington Gas’s recent rate case, in which the PSC denied Washington Gas base rate recovery for certain Strategic Infrastructure Development and Enhancement (“STRIDE”) gas infrastructure replacement projects. The PSC found that, when making capital expenditure decisions (such as what gas pipes to replace), the company failed to consider likely contractions in gas consumption and non-pipeline alternatives, as required by prior PSC orders—an analysis State law also requires. But the PSC allowed Washington Gas to continue recovering, through the STRIDE surcharge on customer bills, STRIDE costs for which it had disallowed recovery in base rates.
“The PSC correctly rejected base rate recovery because of Washington Gas’s compliance failures,” said Maryland People’s Counsel David S. Lapp. “But Washington Gas customers should not continue paying for STRIDE costs that the Commission has disallowed in a rate case and that the law prohibits from being recovered through the surcharge.”
STRIDE was enacted in 2013 to allow gas utilities to benefit financially from accelerated cost recovery via a surcharge for work to replace aging infrastructure. Through the surcharge on customer bills, gas companies can collect costs and profits from ratepayers even before pipeline projects associated with the surcharge have been completed. When a gas utility with a STRIDE plan files a rate case, the utility adds its past STRIDE costs to its base rate request, subject to the PSC’s approval. OPC’s filing yesterday states that once a utility seeks past STRIDE costs in a rate case, the STRIDE law prohibits the utility from continuing to receive surcharge recovery on those costs.
To read more about STRIDE and OPC’s advocacy to address costly gas infrastructure spending, visit OPC’s website.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers in 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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