BALTIMORE (WBFF) — With the frigid temperatures and concern about rising energy bills, while supply costs play a big role, so do BGE’s distribution rates.
During the colder months, residents will use more energy, resulting in higher costs. Even if the thermostat doesn’t move, it takes more energy to heat your home than it does to cool it. Supply costs are also increasing due to growing energy demand, with data centers driving a lot of the demand, along with electrification. Retiring power plants are also contributing to this supply and demand imbalance. Lawmakers and officials have pointed to a “flawed” capacity auction at PJM, the regional grid operator, which resulted in significantly higher prices. BGE does not control or set the supply price. Based on cost estimates provided by BGE, for a residential electric customer who used 500 kWh, the supply cost would make up roughly $67, of a roughly $108 total.
However, Baltimore Gas and Electric does control the distribution rates, which are impacted by infrastructure spending. With recent rate increases, residents have voiced frustration about the high cost of gas delivery. Based on the cost estimates provided by BGE, for a residential gas customer who uses roughly 100 therms, the gas delivery charge is nearly $94 of a roughly $180 total. The supply cost is just short of $62.
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“How can they charge me more for delivery than what I used?,” said Baltimore resident Norma Schlein.
“So the price of natural gas has nothing to do with the distribution rate that you see, and that’s the cost of, to maintain and upgrade the pipes that bring the gas to our customers,” said Nick Alexopulos, a spokesperson for BGE.
BGE has drawn a lot of criticism from lawmakers, local and state officials, and other advocates when it comes to their aggressive infrastructure spending. Many have argued BGE’s spending has driven up costs for residents, and in turn, driven up company profits.
“We have an obligation to serve our gas customers and our electric customers safely and reliably,” Alexopulos said. “And our gas system is the oldest in the country, and we are working diligently to upgrade it and modernize it so that our customers are not served by brittle, crumbling pipes that are at a higher risk of leaking or breaking.”
In a recent presentation before lawmakers, while also acknowledging challenges with PJM, the Maryland Energy Administration noted that “energy delivery costs have been increasing disproportionately. This is largely driven by questionable utility capital investments as well as the cost of procuring energy through PJM,” the presentation read.
“Well, that is an opinion,” Alexopulos said. “Our dedicated engineers, line workers and gas workers are out there every day maintaining our system and upgrading it for our customers, and our work is reviewed and approved by regulators.”
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In December, The Maryland Public Service Commission denied almost half of BGE’s funding request as part of its multi-year rate plan. Of the $152.3 million ask to recover costs from ratepayers, the PSC granted just $77.2 million. Even with a significant amount of the funding denied, beginning this month, there will be a monthly bill impact of 72 cents for the average residential electric customer, and $1.95 for the average residential gas customer.
“Utilities have this, this incentive to spend faster, spend more, and we’re not saying. Our position is not that they should stop spending anything or doing any infrastructure work. Of course, we need infrastructure work, but we should only do what’s necessary,” said David Lapp, with the Office of the People’s Counsel.
“All of the work we’re doing is necessary and critical, especially the work to remove the riskiest assets off of our gas system,” Alexopulos said. “And again, there’s not an authoritative body on planet earth who would disagree with that. There are activists who would disagree with that, but those activists are not engineers, and they’re not responsible or accountable for the consequences of the ruinous policies that they’re promulgating.”
Given the affordability issues many residents are facing, when asked if BGE plans to make any changes in infrastructure spending moving forward or if they will continue spending at the same rate, Alexopulos said, “looking into the future, here’s the thing. I can’t say that, because that is dependent on commission decisions. We could go to the commission and ask for more or less or less of the average spending, and ultimately, it’s going to be up to them.”
Alexopulos also noted that the state’s energy policy and clean energy goals could influence future spending, along with many other factors.
Residents will see another electric rate increase on March 1, which Alexopulos said is not a BGE rate increase. He said this was based on a previous decision by the PSC to shift costs to certain lower-usage months.
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