We are all feeling the heat from rising gas and electric bills. While there is no quick fix for all of the factors driving the increases, mounting evidence makes clear that we should not be letting the utilities that serve Maryland off the hook.
These utilities bring energy into your home. They buy gas or electricity and pass those costs on to you. They often then go before Maryland’s Public Service Commission seeking additional changes — read “rate increases” — to deliver the energy to your home. The result is increasing monthly utility bills.
How does this process typically unfold? The handling of one recent case, a Columbia Gas rate-hike request, offers an instructive example of some of the dynamics pushing up your monthly bill.
Any company that distributes energy to your home must keep the infrastructure underlying that distribution — all the pipes and powerlines — in working order. These companies must plug or replace leaky pipes and fix downed or inoperable electric lines or substations. And, yes, some types of older pipes may need upgrading to prevent leaks down the road. But none of these realities give utilities a blank check to rip up streets full of existing pipe at top-dollar rates.
Most utilities have been seeking that blank check anyway. Many are emboldened by a state law, passed in 2013, which allows utilities to replace gas infrastructure in the name of “public safety” and allows them to get their money up front. The utilities frequently interpret this as their unlimited right to bill ratepayers. The recent filing from Columbia Gas, for example, shows that the company doesn’t want to only plug or prevent leaks. The company also wants to replace significant amounts of newer, perfectly good pipes.
The Maryland Energy Administration, whose stated mission is to promote clean, affordable and reliable energy, recently highlighted this bizarre situation in a post-hearing brief: “Columbia Gas has made clear that it will continue with business-as-usual gas infrastructure spending — even for non-leaking and non-priority pipe that poses no risk of harm — until the Maryland Public Service Commission explicitly instructs it to change course.” Columbia Gas, the brief continues, “has a stated revenue requirement … primarily driven by accelerated gas infrastructure replacement.”
The company’s ratepayers, in short, don’t only get hit with the cost of replacement pipe. They must also cough up the 8 or 9 percent above that replacement cost for the utility’s built-in profit. While Columbia Gas and other companies, including BGE, have addressed leaks and those pipes with a strong likelihood of near-term leakage, they need to put the brakes on replacing so much of their non-leaking and non-priority pipe.
Would you stop replacing perfectly good, non-leaking pipe if you were guaranteed an almost 10% return on your investment? In most years, the stock market doesn’t even do that well. And the costs are staggering, particularly for the Baltimore region’s behemoth BGE.
In the end, who ends up paying the freight for unneeded pipe replacement? Every one of us who pays their bills.
In Cumberland, Columbia Gas sought reimbursement for pipe replacements in several projects. In one project, nearly half the pipe replacement will go for non-priority pipe.
This sort of reimbursement request is not new. A public utility law judge in two recent cases expressed alarm over the amount of non-priority pipe the utility was seeking to replace — about 236% more than the priority pipe replaced in 2023.
Fortunately, Columbia Gas withdrew both cases before they reached the Maryland Public Service Commission.
That commission recently instructed another utility, Washington Gas, to “consider all cost-effective non-pipeline alternatives available to defer, reduce or remove the need to construct or upgrade components of their natural gas system.” And the commission has also denied reimbursing BGE for replacing some of its transmission pipe because the company had failed to consider less costly options.
Every gas utility in our state appears to be following the same playbook: Replace as much pipe as possible while ignoring or downplaying less costly — and equally safe — alternatives.
Are these companies the sole reason for our rising utility bills? Absolutely not. But local utilities aren’t doing enough to slow down their price hikes. In fact, they seem to be doing their best to keep the price hike ball rolling.
This past month, the new chair of the Federal Energy Regulatory Commission, Mark Christie, urged attendees at an energy conference to ask themselves two questions when looking at energy prices and policy: “Who pays? And who profits?”
Two damn good questions that seem to say it all.
Paul G. Pinsky is the director of the Maryland Energy Administration, to which he was appointed by Gov. Wes Moore. Pinsky was previously elected seven times to the Maryland State Senate, where he served as the lead sponsor of the landmark Climate Solutions Now Act of 2022.