BALTIMORE; 4:30 p.m. ET – The Maryland Public Service Commission today ordered a partial rate increase for Baltimore Gas and Electric Company (BGE) in the amount of $33.6 million for its electric distribution rates and an increase in its gas distribution rates of $12.5 million, or approximately 41 percent and 52 percent of what was requested, respectively.
The new rates will result in an estimated monthly increase for average residential bills of $2.13 (or 1.66 percent) in their electric bills and $0.73 (or 1.06 percent) in their gas bills. BGE had requested an $82.6 million increase for electric distribution and a $24.4 million increase for its gas distribution. The increase is granted to the company primarily for safety and reliability investments.
In Friday’s Order 86060, the Commission balanced various interests and obligations, which include: “(1) the need to set just and reasonable rates for rate payers; (2) consumers’ expectations and our obligation to ensure safe, reliable service; and (3) the need to adhere to our legal requirement to maintain the utility’s financial integrity and allow it to earn a reasonable return.”
The Commission also determined that economic conditions have not changed significantly since the company’s return on equity (ROE) was last set, and therefore declined BGE’s request for an increase in its ROE, to 10.5 percent for its electric distribution operations and 10.35 percent for its gas distribution operations. Instead, the Commission maintained its ROEs at 9.75 percent and 9.6 percent, respectively.
In addition, BGE proposed a five-year, $136 million Electric Reliability Investment (ERI) initiative to accelerate reliability improvements to its distribution system through eight programs. A majority of the Commissioners voted to implement a less costly, $72.6 million ERI initiative consisting of five of the eight programs, which will serve to improve the reliability of the grid during both normal weather and in severe storms. “With the increase in number and severity of extreme weather events such as the 2010 Snowmaggedon, 2011 Hurricane Irene, June 2012 Derecho, and October 2012 Superstorm Sandy, it is clear to us that we must continue to focus on the reliability and resiliency of the Maryland electric distribution system.”
The programs include doubling the remediation of poorest performing feeders, installing reclosers to minimize the number and duration of outages on 13kV and 34kV distribution lines, alternative routing of 34kV substation supply lines and selective undergrounding. Over the course of the initiative, the Commission will require BGE to comply with the following conditions: (1) provide a detailed description of the work to be performed, (2) set performance objective(s) for each project, (3) establish major milestones and estimated costs for each, and (4) provide estimated total costs for each project. For an average residential electric bill, the surcharge means an additional $0.08 per month in 2014, $0.18 in 2015, $0.26 in 2016, $0.31 in 2017 and $0.36 in 2018.
As the Commission noted, any utility rate increase is granted reluctantly and “…only when we are persuaded by the evidence that the increase is necessary to maintain a reliable and safe distribution system, a financially sound utility, and that it will improve the experience for its customers.”
The order also included a dissent on the ERI surcharge by Commissioners Harold D. Williams and Lawrence Brenner.
The new electric and gas distribution rates will become effective on December 13, 2013, and the ERI rates will be in effect no earlier than April 1, 2014.
Source: Maryland PSC