New Details On BGE Conduit Deal

Baltimore energy customers may have heard of a memo regarding plans for a BGE rate hike that could raise electricity bills as soon as January 1. PSC regulators ordered the release of the memo that reveals a lucrative underground conduit deal between BGE and the City of Baltimore. The deal gives the utility access to use the city’s gas and electricity conduit system. Because the deal may allow the utility to charge customers millions of dollars, let’s see how it may affect your future BGE bills.
What Is In The BGE Conduit Deal?
On its face, it seems simple. The BGE conduit agreement leases city’s conduits in exchange for BGE investment and improvements of the grid. According to the deal, BGE would charge their customers $860 million over 50 years to pay for the deal. But as a result, BGE could gradually raise the delivery charge portion of Baltimore energy bills until the mid-2070s.
As you can imagine, this could be costly for customers. While annual costs over the next six years would be lower than what customers have paid in the past, the long term costs could be higher than $212 million. And that’s especially because BGE customers would be paying BGE’s rate of return and its taxes on that return.
But, the once-confidential memo highlights a troubling sticking point. Normally, utilities are allowed to pass on the costs of capital improvements to customers. These are found in the distribution charge of their bill. But there’s two problems with the BGE conduit deal that could affect Maryland electricity rates.
The first problem is that utilities are usually limited to passing on capital improvement costs for things that they own. BGE argues that its long term lease arrangement with Baltimore puts its improvements more in line with those of an owner. But the Maryland Office of People’s Counsel contended previous filings with regulators show BGE taking the stance of a short-term renter.
The second problem is that BGE only uses about 76% of the city’s conduit system. The rest is rented out to other companies. That means that if a section of conduit is carrying a mix of BGE wires and piping along with other companies’ wires and pipes, then BGE should not pass capital improvement costs for that section to ratepayers.
Will Conduit Deal Memo Scuttle the Rate Hike?
Undoubtedly, the PSC will certainly consider how the conduit deal affects the utility’s reasons for is requested rate hike. All the same, it’s important to keep shopping for the best electricity prices. That way, you can save on your energy supply charges and reduce your monthly bill. You can always shop for the best rates at https://www.mdenergyratings.com. Plus, you can keep up to date on the news that could affect your bills.