Bills that would allow a surcharge of up to $2 per month on residential natural gas bills to pay for new pipelines and other distribution system upgrades passed both houses of the Maryland General Assembly last week, as most Harford County legislators gave the bills their support.
The exception was in the House of Delegates, where Harford Dels. Glen Glass and Pat McDonough were among 18 votes cast against HB-89, which received 119 yeas, including from Harford Dels. Mary-Dulany James, Susan McComas, Wayne Norman, Donna Stifler and Kathy Szeliga. Del. Rick Impallaria was one of the sponsors on the House side.
Over in the Senate, SB-08 passed 34-13 with Harford's three senators, Barry Glassman, Nancy Jacobs and J.B. Jennings, voting with the majority in favor. The Senate defeated similar legislation in 2012.
Aging gas lines
According to the bills' sponsors, the new surcharge will allow suppliers like BGE and Washington Gas Light to speed up replacement of aging pipelines. Proponents say the two companies have 2,000 miles of pipeline that need to be replaced, putting Marylanders who live nearby at risk.
"Some of these lines are 100 years old," Sen. Thomas M. "Mac" Middleton, chairman of the Finance Committee, commented. "This is a tool where they can expedite this whole replacement process."
Middleton, a Charles County Democrat, said the bill would benefit ratepayers, noting that the utilities are already entitled to recover their costs from the modernization work from ratepayers.
But opponents contend the utilities are trying to force ratepayers to finance up-front investments that the companies should have been making all along.
BGE already has a multi-year gas line replacement project in progress called Operation Pipeline which, according to its website, will upgrade hundreds of miles of natural gas pipes and equipment in dozens of communities throughout central Maryland.
"Through Operation Pipeline, we are proactively replacing cast iron and bare steel pipes which are coming to the end of their useful service lives with new, durable gas mains that will serve customers well for decades," the website states. Downtown Bel Air and Route 22 (Churchville Road) in the Fountain Green area are two locations where BGE is due to replace gas mains this year, according to the website.
In conjunction with replacing lines, BGE has been replacing meters in homes and many businesses, at no cost to customers, according to the company's website. The new meters are needed for compatibility with the higher pressure new lines, the utility says.
Aaron Koos, a BGE spokesperson, said Monday the company had already accelerated its replacement of 1,400 miles of cast iron gas pipe in its service area and said the proposed surcharge will allow BGE to accelerate such activity "even further," while meeting federal safety mandates that require utilities to phase out cast iron pipes.
Koos said Harford County has 44,260 natural gas customers in Harford County, out of more than 650,000 in its service area.
In addition to supporting the surcharge to enable a faster upgrading of its infrastructure, Koos said the company believes it will help keep customers overall costs down in the long run.
Actual surcharge unknown
The customer surcharge would not necessarily start out at the $2 maximum. For instance, under a plan submitted by Washington Gas, the surcharges would start at 8 cents a month this year and gradually increase to $1.35 over five years. Rob Gould, a spokesman for BGE, said last week the utility doesn't have a plan but anticipates any surcharge it might seek would be under the $2 cap.
Koos from BGE said Monday the surcharge would apply only to specific projects, and each project would require PSC approval, with the regulatory body also setting the surcharge based on actual costs.
While the gas companies would have to provide detailed documentation about the cost of projects funded by any surcharge, the legislation passed last week contains one kicker. As stated in HB-89, if the actual cost of a construction plan to be funded through a surcharge exceeds the amount collected under the surcharge, the PSC would have the ability to authorize the utility to increase the surcharge, provided it can demonstrate the additional costs "were reasonably and prudently incurred."
Koos noted, however, that in no instance would the total amount of the surcharge be permitted to exceed $2 per residential customer per month.
According to the Department of Legislative Services, there were 30 "significant incidents" involving pipelines in Maryland from 2002 to 2011, killing one, injuring 16 and causing $12 million in property damage.
Captive supplier in many ways
Back home, on Main Street, some criticism of the surcharge is already bubbling.
Although the actual amount of the surcharge is subject to approval by the Maryland Public Service Commission and can be provided to any gas supplier, BGE will be the recipient of most of the local venom, since they are the principal supplier in Harford.
Last week, the captive nature of many of BGE's activities in the county came under fire during a meeting of the County Board of Estimates, as it reluctantly approved a $62,000 contract with the utility to relocate its electric line in conjunction with the project to replace the bridge over Little Deer Creek on Harford Creamery Road in the northern end of the County.
Estimates board member Warren Hamilton complained bitterly about BGE's "absolute control" over such matters
"What option do we have to do otherwise?" Hamilton asked during the discussion of the non-bid contract. Highways engineer Julio Espinoza said BGE wanted more for the job, but he was able to get them to go down on the price.
"They didn't like it," he added.
Which caused Hamilton, a longtime construction company executive, to remark that the $2 gas surcharge would probably let the company "even it out."
Michael Dresser of The Baltimore Sun and Allan Vought of The Aegis contributed to this article.Copyright © 2014, Los Angeles Times