Community members had their say before the Maryland Public Service Commission Sept. 19 regarding Baltimore Gas and Electric’s proposed rate increase. Baltimore residents, community association leaders, health care workers, environmental and consumer advocates, and government officials filled the commission’s Baltimore chambers and many testified. With just one exception, speakers urged the commission to reject BGE’s proposed increase that would amount to $602.4 million over three years.
BGE’s proposal is deeply problematic in terms of current service, accountability and affordability. In this case, I can speak from personal experience. My neighborhood in central Baltimore had eight power outages lasting from two to 12 hours in July during a heat wave. Food spoiled, medicine that needed to be refrigerated went bad, and our neighborhood pharmacy was unable to open for a full day, meaning prescriptions went unfilled. People with chronic illnesses like my son and me, who need air conditioning for health reasons, spent nights without sleep and had difficulty breathing.
When finally reached about this poor service, BGE did not take responsibility for disruptions in service and refused to compensate residents for spoiled food or medicines.
In a truly free market, I could simply take my business elsewhere — find a utility company that provides better service and more affordable rates and that prioritizes clean energy over climate-warming fossil fuel. But BGE, like other utility companies, has a monopoly to distribute energy in Maryland. It has no competition and lower risks than in a traditional market, so the commission is charged with approving its rates and overseeing the industry.
As a monopoly, the company holds disproportionate control and power over its customers. We can’t choose other alternatives, so it is critical that any rate-making proposals are subjected to rigorous scrutiny and due diligence.
Traditionally, Maryland has required utility companies to request rate increases on an annual basis. Rate increases have typically been requested after new company investments so that the clear need for an increase was demonstrated.
In 2020, the commission approved a multiyear rate hike for BGE as a pilot program. The evaluation of the pilot plan has not yet been completed. A work group to evaluate the program could not reach consensus on recommendations. It is premature to approve a second multiyear rate plan before the evaluation of the original pilot program has been completed.
Yet before the evaluation of the first pilot program is completed, BGE is back asking for a second multiyear rate increase. Essentially, BGE is asking for our trust and for us to pay rate increases based on what they expect to spend. BGE seeks to shift the costs of their infrastructure investments to customers while reaping the profits from these investments. A multiyear proposal incentivizes BGE’s desired spending spree when what is needed is prudent oversight and review by the PSC.
Rate increases in 2022 and 2023 are creating undue hardship for households across Central Maryland, particularly in Baltimore. Again, I can speak from experience. Since 2021, my BGE bills have increased by $200 per month, or $2,400 per year, while my consumption remains unchanged. As a middle-income earner, I can pay these higher rates, but there are trade-offs: This $4,800 could, for example, have gone to needed home repairs or been added to my retirement savings.
While this cost increase is a hardship for some middle-class families like mine, it is catastrophic for many families my nonprofit organization supports. Our Securing Older Adult Resources program has already served nearly 1,000 older adults this year, returning almost $1 million in tax credits to low- and moderate-income households.
Nearly 20% of those we served said utilities were their biggest expense. An increase in utility costs will hurt working families living paycheck-to-paycheck, forcing them to make impossible choices between keeping the lights on or keeping food on the table. In 2022, 54,000 Baltimore households had their utilities cut off, and if current trends continue, up to 75,000 may lose their utilities by the end of 2023 — a 50% increase from 2017-2019.
Conversely, BGE credits the 2020 multiyear rate plan with increasing earnings by $5 million between 2022 and 2023.
What is good for BGE is not necessarily good for consumers. What we do know is that rates are unaffordable, and the impact of these higher utility rates hits low-income Black and brown communities hardest.
Until an independent evaluation including a cost-benefit is completed, we have no measures or metrics to assess BGE’s last multiyear proposal. Under no circumstances should the commission approve a new multiyear proposal until an assessment has been made about the pilot program.
Marceline White is executive director of Economic Action Maryland (formerly Maryland Consumer Rights Coalition).