October 28, 2010|By Jamie Smith Hopkins, The Baltimore Sun
Baltimore Gas and Electric Co. customers will likely save an average of $192 a year on electricity starting next summer, as falling energy prices push rates to their lowest point since a spike that stoked outrage several years ago.
BGE, which plans to officially announce the figures Friday, has locked in most of its supply for the 12-month period beginning next June. It estimates that typical residential consumers will pay $16 less per month on average than they're shelling out for the current year, and $28 less a month than they did when rates peaked two years ago.
Consumers are benefiting from a global downdrift in energy prices. Wholesale electricity prices have dropped in large part because of declining costs for natural gas, driven by an abundance of supply. Less demand for power — resulting from energy-efficiency improvements and a rough economy that's prompted consumers to conserve to save money — is also playing a role.
"We're certainly pleased," said Paula Carmody, head of the Maryland Office of People's Counsel, which represents residents on utility matters. "It is a significant decrease in the price."
BGE, which has 1.1 million residential customers, projects that its rate will decrease 11 percent. Other utilities in Maryland also anticipate falling rates next year, including 15 percent for Pepco customers and 12 percent for Delmarva Power consumers.
Electricity rates have been closely watched in recent years, as the recession hit household budgets and as bills jumped following the end of the state's six-year cap on rates. The cap was lifted in 2006 as part of electricity deregulation. The average residential bill that year was about $141 a month, up from $82 a month when the rate freeze was in place, BGE said.
Next year's tab will be the lowest since then. BGE projects that average residential customers will pay $129 a month for electricity from June 2011 through May 2012. The average consumer is paying $145 a month now.
The peak was in 2009, when the average monthly bill hit nearly $158, the utility said.
Costs to consumers aren't set in stone for next year. BGE still has to buy 15 percent of its electricity supply, and it is separately requesting an increase in the rate it charges to deliver power to customers. A bump up in the delivery rate would add just under $2 a month to the average electricity bill and about $2.70 a month for average gas customers, if Maryland's Public Service Commission approves the full request. A decision could come in December.
"As fuel prices drop with the bad economy, we expect that electric bills will as well — so there's some good news for consumers," Hank Greenberg, AARP Maryland's director of advocacy, wrote in an e-mail. "However, there are plenty of rate increases on the horizon, including BGE's distribution rate case."
Mark Case, BGE's senior vice president for regulatory affairs, said the increase request is small compared with the decreases in energy prices.
"Even if 100 percent of what we ask for were approved, customers would still be seeing a very significant decrease in their overall bills," he said.
Vince Tola, a member of the Maryland Coalition for BGE Reregulation, is frustrated that the rate — even with the coming drop — won't be anywhere close to what it was before the cap came off. The group demonstrated this week outside the office of the Public Service Commission, the state's top energy regulator.
"It's still so much higher than it used to be," Tola said. "Deregulation is an enormous failure, and it's very hard on working families."
The PSC must sign off on BGE's electricity purchases, the most recent of which was made through an auction this week. That approval is expected Friday.
The drop in energy prices means that the rate next summer will be slightly lower than what customers are paying even now in the off-peak season. That's unusual because consumers typically can't escape a summer spike in the rate.
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Cost of electricity
Monthly electricity bill for an average residential customer of Baltimore Gas and Electric Co.:
•$129 (projected) for the year beginning June 2011
•$145 for the year beginning June 2010
•$158 for the year beginning June 2009
