Reliability surcharge not a bright idea for consumers

October 15, 2012

Gov. Martin O'Malley did an excellent job appointing a competent and independent Public Service Commission to look at the issues around utility fee structures in Maryland. The PSC sees the whole picture when they review a company's request for a rate increase, and the public relies on them to review the performance and profits of the utility companies — their independence should not be compromised. AARP does not support the recommendations released recently by a work group to allow power companies to add surcharges to utility bills in order to fund reliability and enhancement improvements ("A worthy investment," Oct. 4).

Electric companies, natural gas companies, telecom and others either have attempted or will attempt to get in line to collect a separate stream of income above and beyond the rate currently charged. When will it end? The PSC has a proper role to play to make sure consumers don't bear unfair financial responsibility for the lack of foresight by these companies.

In May, AARP released a new report, "Increasing Use of Surcharges on Consumer Utility Bills," which reveals how the increased use of fee and surcharge devices burden consumer utility bills and short cut essential rate protections for the consumer. You will find the report at The report included specific justifications utility companies use to push surcharges past regulators and information about why these claims are so often invalid.

There is no incentive to control costs if utility companies are paid a surcharge up front for work that has not been done. And surcharges are subject to less regulatory review than are rate cases.

Surcharges for work in advance puts the risk on customers, who have to pay more based on the promise of improved service. Meanwhile, utility companies earn profits over many years without sufficient reinvestment in their own infrastructure. These companies should do the work and then recover costs on the basis of quality and efficacy of that work.

Hank Greenberg, Baltimore

The writer is AARP Maryland state director.

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