State utility regulators approve electric, gas distribution rate increases

December 06, 2010|By Liz F. Kay, The Baltimore Sun

Baltimore Gas and Electric residential customers will pay on average an additional $16 on electric bills and $10 on gas bills annually, under an order released by Maryland's top public utility regulators Monday.

The increases will raise an estimated $30.9 million in electric distribution rates for BGE, as well as $9.75 million for gas delivery. According to the order, the new rates apply to charges incurred since Saturday.

Monday was the deadline for the Maryland Public Service Commission to issue a decision on BGE's request, filed in May, to increase distribution rates — the price that customers pay to have power and gas delivered to their homes. Typically this charge makes up about 25 percent of a customer's bill.

"BGE is disappointed with the PSC's decision in that it falls short of what we believe is necessary for system improvements, especially now at a time when power prices for our customers are falling at a much greater rate than the modest increase requested," BGE spokesman Rob Gould said.

BGE could contest the commission's order. Gould said company officials would review a more comprehensive version of the order that's expected to be released in coming weeks.

The utility had argued in its proposal that it needs an estimated $47 million to cover increased expenses for electricity and $30 million for gas delivery. But consumer advocates had argued the company could get by with less than half that.

Theresa Czarski of the Office of the People's Counsel, which represents ratepayers before the PSC, said the approved figures were slightly higher than expected, but that "the impact should be pretty slight on a monthly basis for an average user." And lower-than-normal energy costs going into this winter should soften the blow, she said.

The changes amount to an average increase of about $1.34 per month in electric distribution charges for residential customers. Residential gas customers will see an average monthly increase of about 85 cents per month in distribution charges.

In June, state regulators and BGE reported that rates for electricity supply had reached its lowest point in years, saving the average consumer $161 annually, and the rates are expected to decrease again next June as well. Natural gas prices also have declined because of the discovery of new supply.

Commissioners stated in their decision that there's never a good time for a rate increase but that "the governing law requires us to establish rates that are just and reasonable for the services BGE provides to customers." As a result, they must consider what BGE needs to provide safe and reliable service to customers and still earn a reasonable rate of return.

This rate increase does not include the cost of the systemwide rollout of smart meters that the commission approved in August. The PSC barred BGE from seeking to recover the expenses of that program until after the meters are in place.

Johanna Neumann of Maryland PIRG said the decision shows that the PSC "really needs to get serious about energy efficiency."

"The PSC needs to give homeowners more tools to be able to use energy more wisely and more incentives so they get more help with the upfront costs," she said. "The rates can go up, but the bills can go down if we use less energy."

Expenses have increased in the 17 years since BGE last filed a request to raise distribution rates, company officials have said. BGE said its property taxes have increased 17 percent in the past 10 years. Tree-trimming costs also have increased, and the utility said it now pays more for electric wire and cable.

BGE's proposal is the first request to raise distribution rates since 1993, partly because of agreements the utility has made as part of other settlements.

For example, in 2000 BGE reduced distribution rates by 6.5 percent and agreed to keep them there for six years as part of deregulation. The proposed electricity distribution rate increase was capped at 5 percent under an agreement with the PSC two years ago.

Then, when the PSC approved a nuclear joint venture between Constellation Energy Group and Electricite de France in 2009, the commission ordered BGE not to apply for a distribution rate increase until this year.

In October, Constellation sold its 50 percent stake in UniStar Nuclear Energy to EDF, giving the French company full ownership of plans to develop a proposed third nuclear reactor at Calvert Cliffs.

•Distribution charges typically make up about 25 percent of a customer's bill.

BGE distribution charges

•On average, residential customers will pay an additional $16 on electric bills and $10 on gas bills annually.

•On a monthly basis, the charges increase about $1.34 for electric distribution and 85 cents for natural gas.

    Baltimore Sun Articles
    Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.