BGE estimates Irene response cost $81 million

Customers lost power for an average of 37 hours

September 21, 2011|By Hanah Cho, The Baltimore Sun

Baltimore Gas and Electric Co. spent $81 million to restore electricity to households and businesses that lost power in the aftermath of Hurricane Irene — costs that are expected to be passed on in part to all customers, the utility reported Wednesday.

Calling Irene a hurricane of "historic proportions," BGE outlined its preparation and restoration efforts in an extensive report to the Maryland Public Service Commission, the state's energy regulator, which will examine the storm responses of several utilities during hearings next month.

About 756,000 of BGE's 1.2 million customers had no electricity for an average of 37 hours after Irene sideswiped Maryland last month, disrupting lives and businesses and delaying the beginning of the school year in many districts.

The outages also left customers and public officials fuming about BGE's pace of restoration and its customer service phone line, which was intended to keep people informed about when repairs would be made but that many complained was inaccurate.

It took eight days to restore power to all affected customers, though more than 95 percent got electricity within five days, according to the utility. Most outages were caused by downed trees and limbs falling on power lines.

BGE ratepayers will likely foot some of the $81 million cleanup bill. Typically, utilities have recovered part of their storm-related costs through rate increases. BGE officials said they plan to pass on those costs in a future distribution rate increase, which would have to be approved by the PSC.

"While the cost of the hurricane is currently estimated at $81 million, shareholders, and not BGE customers, bear that responsibility at this time," BGE spokesman Rob Gould said. "BGE, however, will eventually seek to recover Irene-related costs through the PSC process."

Carly Mercer, from the consumer advocacy group Maryland PIRG, said BGE customers should not have to bear the costs of the storm cleanup, given the utility's lackluster response.

"The cost of restoring power should be on the supplier and not be taken out on consumers in future rate increases," she said.

Hank Greenberg, state director of AARP Maryland, said he wants a detailed accounting of BGE's $81 million storm bill. The advocacy group has worked to lower utility bills on behalf of seniors, many of whom live on fixed incomes.

"We'll look at whether that's justified in light of all the inconveniences suffered by consumers in Maryland," Greenberg said, noting that taxpayers are on the hook for federal recovery aid. Several areas in Maryland are eligible for the aid.

In evaluating its own performance, BGE said it has identified areas for improvement, including providing customers more accurate estimated times of restoration and raising public awareness of the utility's restoration process.

"We recognize there are lessons to be learned and opportunities to improve, and we will fully explore these as we work to uphold our commitment to delivering safe, reliable gas and electric service to our Central Maryland customers," BGE wrote in its 67-page report.

Gould said the utility's storm tab includes the cost of new poles and wires — which would not be recovered from customers because those costs are covered in the utility's capital budget.

It is not clear yet how much BGE would be able to recover from customers through the regulatory process.

Last year, the PSC approved BGE's request to increase rates for delivering electricity, the first rate hike of its kind in 17 years. The utility had been restricted from seeking such increases in part because of agreements struck with regulators. For example, BGE in 2000 reduced distribution rates, which make up a portion of utility bills, and agreed to keep rates at the lower rate for six years as part of the industry's deregulation.

Gould said BGE did not recover costs related to recovery efforts in the wake of Tropical Storm Isabel in 2003. At that time, BGE said it took eight days to restore power to 790,000 customers. And the utility said it spent more than $80 million to repair the damage.

The PSC will begin hearings on the Irene response Oct. 3. The public can comment on the performance of BGE and other utilities at two meetings beginning next week.

Paula Carmody of the Maryland Office of People's Counsel, which represents consumers on utility issues, said her agency plans to weigh in next week on BGE's storm report, which it is still evaluating.

Carmody's office has criticized utilities for their responses to past storms, including Pepco's slow power restoration during snowstorms in 2010. Such frustration prompted state lawmakers to enact a law this year to hold utilities accountable for their performance. Reliability standards, which are being crafted by the PSC, would allow the state regulator to impose fines on utilities that fail to meet those performance measures.

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