BGE requests rate increase on heels of last case

Winter Weather and BlizzardsPoliticsPikesvilleHurricane Sandy (2012)Litigation and RegulationCivil and Public ServiceBaltimore Gas and Electric Co.

Baltimore Gas and Electric Co. asked Friday for another rate increase, three months after winning approval for higher charges, and company officials said they expect to seek more in the future.

It's the third time in as many years that BGE has requested higher distribution rates. If approved, the typical residential customer getting both electricity and gas would pay about $72 more a year for distribution.

Company officials said they expect to ask for frequent rate increases as they seek reimbursement for more aggressive tree-trimming, infrastructure upgrades and other work aimed at improving service.

"This phase that we're in of significantly investing in reliability, it's not sort of a 'two-year effort and then finish' kind of thing," said Mark D. Case, BGE's vice president of strategy and regulatory affairs. "This is a long-term cycle."

BGE said its request — which should be decided by state regulators in December — would add $4.41 per month to the typical residential electric customer's bill and $2.50 per month to the typical residential gas bill. Customers who receive both services would pay about $6 extra in total distribution charges, the company said.

That increase would come on top of higher distribution rates from the last two cases that add up to nearly $4 a month on typical residential electric bills and about $4.80 on typical residential gas bills, BGE said.

In addition, BGE asked Friday to add a monthly surcharge on electric bills for five years to accelerate outage-reduction improvements, a move it called consistent with recommendations by Gov. Martin O'Malley's utility task force in the aftermath of last June's damaging derecho windstorm. Typical residential customers would pay about 34 cents a month in the first year, rising to 75 cents by the fifth year, BGE said.

The company said its growing infrastructure expenses in recent years are being offset for customers by generally lower energy costs and improved energy efficiency. If the Maryland Public Service Commission approves the request in full, the typical BGE residential electric bill still would be more than $8 a month cheaper than it was four years ago, the company said.

The monthly gas bill, though, would be more than $5 higher. And the frequent rate increase requests are prompting customer fatigue, particularly after a year that included two major-outage storms.

"Of course I'm not for it," said Noel Levy, co-chairman of the infrastructure committee for the Pikesville-Greenspring Community Coalition. "We just keep paying more, and we get less electricity."

Customer advocates said all Marylanders should brace for recurring efforts to raise their rates. Five of the state's major utilities have pending requests for higher charges, according to the Maryland Office of People's Counsel, which represents residential utility customers.

"There's a lot of infrastructure-building going on, so we expect to have a lot of rate cases over the next few years," said Theresa Czarski, the deputy people's counsel.

Count on more requests for surcharges to pay for infrastructure, too. Utilities hope a state law taking effect in June will improve their odds of winning regulatory approval for surcharges on gas customers' bills.

BGE's Case said the utility expects to ask for such a gas surcharge in late summer. The amount — perhaps 25 cents a month — would be used to replace old gas mains made of bare steel or cast iron.

Utilities argue that surcharges allow them to accelerate the pace of work because they would start collecting money as the work begins, rather than after the fact. Maryland's regulators have only allowed utilities to seek rate increases for infrastructure work already performed.

But surcharges drive customer advocates crazy. Charles Acquard, executive director of the Silver Spring-based National Association of State Utility Consumer Advocates, called the charges a "beeline directly into the pockets of consumers" because they don't receive the same level of regulatory scrutiny as rates.

"That's why utilities are after them," he said.

Companies are asking for more surcharges — and rate hikes, too — across the country, Acquard added. Aging infrastructure is one driver of the trend.

BGE said it is seeing results from the past few years of work, such as tree trimming and burying power lines. Outages in all conditions except the most severe storms were down 20 percent in both number and length last year, compared with 2010, Case said.

Of course, the most severe storms produce the worst outages. The derecho and superstorm Sandy fell into that category last year, the former hitting with little advance warning and leaving some BGE customers without air conditioning for eight sweltering days.

The Public Service Commission in February ordered Maryland utilities to come up with a plan to speed up electric-grid improvements.

"As long as major storms such as hurricanes, snow storms and Derechos occur, we will continue to experience widespread outages," the commissioners wrote. "However, we are not satisfied that the duration, extent and experiences of the outages faced by Marylanders are at an acceptable level."

BGE said its proposed electricity surcharge would help pay for its five-year improvement plan, including tree-trimming beyond the state requirements and addressing twice as many of its worst-performing feeders — circuits supplying power to neighborhoods — as now mandated.

BGE also plans to upgrade some feeders with about 300 "reclosers." The devices allow the utility to automatically reroute power to customers, where possible, during an outage, Case said.

All that should help minimize outages, BGE said. But the work won't eliminate them.

"There's just no way to hurricane-proof the system," said Robert L. Gould, a BGE spokesman.

The utility often points to Pikesville as an example of its reliability work. Major tree trimming and removal significantly cut the outage problem there between the derecho in June and Sandy in October, BGE officials say.

"They're doing a lot, I've got to hand it to them," said Levy, who lives in Pikesville.

But he's not pleased at the thought of more rate requests.

"It's going to be a merry-go-round," he said.

jhopkins@baltsun.com

twitter.com/jsmithhopkins

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Winter Weather and BlizzardsPoliticsPikesvilleHurricane Sandy (2012)Litigation and RegulationCivil and Public ServiceBaltimore Gas and Electric Co.
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