OPC on Future of Gas proceeding: New course for utility planning necessary to mitigate escalating rates, misguided investments
BALTIMORE – If Maryland’s gas utilities continue their usual spending on long-lived gas infrastructure, residential ratepayers will face much higher gas distribution costs and future risks for unnecessary infrastructure costs, the Office of People’s Counsel (OPC) said in testimony in the ongoing Public Service Commission (PSC) proceeding on gas utility planning. The PSC should require gas utilities to plan for changing market conditions, policy impacts, and uncertainty, OPC’s expert witnesses said.
“Gas utilities continue to pour hundreds of millions of dollars each year into long-lived infrastructure—even as household gas use changes and more homes rely on electricity for heating,” Maryland People’s Counsel David S. Lapp said. “We are asking the Commission to require the utilities to adopt a long-term planning framework that accounts for changing market trends and includes meaningful consideration of lower-cost alternatives and much greater transparency and reporting.”
Three expert witnesses testified, including in oral opening statements, on behalf of OPC as part of the evidentiary hearings last week and this week in the PSC’s formal proceeding to investigate the long-term planning practices of Maryland’s gas utilities, known as the “future of gas” proceeding.
The case stems from OPC’s February 2023 petition asking the PSC to establish a proceeding to determine what regulatory action should be taken, both in the near-term and over the long term, to mitigate the risks and costs associated with business-as-usual gas utility planning. OPC filed that petition because of the more than half a billion dollars gas utilities are spending on new capital infrastructure each year—spending OPC detailed in its October 2022, November 2023, and February 2025 gas spending reports. OPC’s reports show that after accounting for the utilities’ return, including profits, on their spending, the ultimate cost to customers of the utilities’ annual capital spending is often more than triple the initial investments as the spending is recovered in rates over many decades.
OPC’s experts explained that improvements to gas utility planning practices are necessary to rein in costs and protect ratepayers for multiple reasons, including:
-
Continuing the present course will impose increasingly unsustainable costs on customers. Taken together, Baltimore Gas and Electric Company (BGE), Washington Gas Light (WGL), and Columbia Gas of Maryland’s (Columbia) combined STRIDE and non-STRIDE projected investments would produce an annual capital revenue requirement of more than $2.33 billion in 2044—2.8 times the combined $849 million customers paid through rates in 2024. Those investments will drive up utility rates.
-
Future gas consumption is very likely to decline. Per customer residential consumption for BGE, WGL, and Columbia has been steadily declining since 2000. Combined with recent trends of increasing heat pump adoption and policy changes favoring electric heating, lower annual gas sales and gas demand than what the utilities are currently estimating is likely.
-
Gas companies are replacing gas infrastructure that ultimately may not be needed. Gas infrastructure investments often have useful lives extending decades. If utilities continue investing at the current rate while gas sales stagnate or decline, those investments will, all else equal, put further upward pressure on rates. As customers who can afford to leave the gas system do so, the utilities will recover their fixed costs over fewer customers and lower sales, pushing rates higher still. Without policy intervention, low-income households and renters, who face greater barriers to switching away from gas, are likely be left holding the bag.
-
Alternative fuels and certified natural gas cannot realistically or affordably assist in achieving the state’s climate goals. For example, once certified natural gas arrives in Maryland, it is chemically identical to natural gas with the same leak risks and carbon emissions upon combustion. In addition, projections show that alternative fuels like biomethane (called renewable natural gas, or RNG) and hydrogen are not available in the quantities necessary to meet demand at a price comparable to natural gas.
-
The PSC does not currently have sufficient visibility into how gas utilities are planning for the future. Utilities, for example, should be required to report on existing and planned contracting and hedging, along with the forecasted price of gas for demand that is not covered by existing contracts. Further, improved transparency is needed to evaluate whether the utilities are making prudent investment decisions.
OPC’s experts offer a number of recommendations for future planning: PSC requirements for the 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.
“This isn’t about being opposed to gas or eliminating customers’ ability to choose gas as an energy source,” Lapp said. “Nor would any of our recommendations alter the gas companies’ fundamental obligation to provide safe and reliable service. This is about ensuring that gas utilities are making smart investment decisions.”
The evidentiary proceedings are available both to livestream and as recordings on the PSC’s YouTube channel. Written public comments, referencing Case No. 9707 and limited to 30 pages, can also be submitted here by November 12, 2026.
Read more about the PSC’s future of gas docket and OPC’s advocacy: https://opc.maryland.gov/Consumer-Learning/Future-of-Gas
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.
* * *
|
