For frustrated BGE customers, even small bills too much

Policy allows utilities to charge fee despite outages

July 11, 2012|By Scott Dance, The Baltimore Sun

Sharon Mostyn and her family spent $1,500 to survive a week without power, buying a generator, a window air-conditioner and extra-long extension cords for their Towson home. But the thought of paying Baltimore Gas and Electric Co. another dime for the ordeal makes her mad.

She might have to fork over some change for a coming bill, though. A state utility policy lets BGE levy a routine distribution fee on customers — likely less than $1 — even while they lacked electricity. A recent revision limits that to the first 24 hours of massive storm-related outages like those that followed the June 29 derecho windstorm.

However small the charge, it is stoking frustrations that have mounted during a power outage that lasted nine days for some and wasn't the region's first extended outage in recent years.

"Yes, it's less than a dollar for me, but if there were 600,000 people that were out, that's an additional $600,000 they have for not delivering power," Mostyn said. "That's a lot of money they're getting to not deliver."

The fee is known as a bill stabilization adjustment, and it is routinely wrapped into customers' bills for electricity distribution. BGE began applying it to customer bills in 2008 as a means to make up for revenue lost to energy-efficiency initiatives. It needs the revenue to maintain the electric grid.

In some months, it's a charge; in others, it's a credit. The mechanism ensures BGE has no more and no less than the Public Service Commission decides it needs to properly maintain the grid.

But commissioners determined in January there was a problem with that policy. During extended outages like those that followed Hurricane Irene last year or severe storms in Montgomery County in 2010, utilities used the fee to recover revenue they lost because hundreds of thousands of customers were without power.

The PSC ordered that utilities could only recoup that lost revenue for the first 24 hours of a major storm event; after that, they had to absorb the cost of storm cleanup. The commission called it an incentive to speed up restoration efforts.

Before the ruling, BGE officials protested the change, arguing that it would unfairly penalize the utility because it has no control over when storms occur. The utility told the PSC it incurred $23 million in average annual expenses to restore customer service after weather events between 2008 and 2010 but it recovered only an annual average of $308,000 through the adjustment.

But commissioners said in the January order the intent of the adjustment "was never to assure 100 percent recovery of costs regardless of utility performance during Major Storms" and "is not tantamount to a penalty nor is it intended to be an automatic finding of utility imprudence."

The Office of People's Counsel, which advocates on utility consumers' behalf to the PSC, had pushed for the policy change. Paula Carmody, who heads that office, said she is satisfied with what the PSC decided.

BGE has collected relatively small amounts from customers during storm events in the past — $81,000 during a July 2010 storm and $188,000 during a January 2011 storm, according to the PSC. That amounted to 7 cents per customer and 16 cents per customer, respectively.

Utility spokesman Rob Gould said Wednesday the utility is abiding by the order.

"The commission's order was an attempt to strike a balance of preserving the financial integrity of the company while ensuring customers aren't unnecessarily burdened financially," Gould said. "We take that money and we reinvest it in the system."

Given the extended outages, some consumers and their advocates aren't satisfied, though. About 675,000 BGE customers lost power soon after the derecho storm's 70 mph winds hit on a Friday night, June 29. The outage list grew to nearly 750,000 customers after more storms and heat-related outages over the next week.

"It's the repetition of these kinds of problems that is a concern," said Jenny Levin, state advocate for Maryland Public Interest Research Group. "They need to take a step back and re-examine their ability to respond to outages without putting an unfair burden on the consumer."

Jim Cusick, whose home in the Westview Park area of Catonsville was without power for a week, said it's only fair that BGE recover its costs through its customers, but said the important question to him is whether the utility is doing so unreasonably.

"Do I want to be charged for power I did not receive? Heavens no," Cusick wrote in an e-mail. "Do I think it reasonable for the utilities to recoup reasonable costs for the crisis? Yes."

Mostyn, the Towson resident, agreed with Cusick. But given the expense her family had to bear, it's not fair of BGE to ask more, she said. The Mostyns hadn't planned a summer vacation yet, she said, but it's unlikely they will now.

"I understand from their perspective they've got to make money or cover their expenses," she said. "That's a lot of extra money we had to spend. Every dollar counts in a tight economy. To add that extra charge is kind of ridiculous."

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