BGE's path toward massive gas equipment spending would cost ... - Baltimore Sun

BGE’s path toward massive gas equipment spending would cost consumers, contradict climate goals, People’s Counsel report says

Baltimore Gas and Electric Co. is on track to invest billions of dollars in its natural gas infrastructure and more than double a typical household’s bill by 2035, which flies in the face of state climate goals, a consumer advocate’s report out this week says.

The Office of People’s Counsel released new projections showing that BGE and two other gas utilities, the three largest in Maryland, are on track to spend $53 billion on gas equipment over the next 46 years. The People’s Counsel, which represents the state’s utility ratepayers, said it based those projections on information in regulatory filings in pending gas cases for BGE, Columbia Gas of Maryland and Washington Gas Light and other publicly available information.

Residential consumers who already have faced rate hikes for gas distribution over the past decade can expect more of the same, People’s Counsel David S. Lapp said.

Projections show that a typical BGE customer using 160 therms a month during winter months and now paying an average $220 per month would pay 104% more — $450 a month — by 2035. By 2050, the monthly bill would jump again, to $575, the analysis shows.

Rate impacts could be even greater as more customers electrify their home appliances and use less or no gas, Lapp said. A shrinking number of gas customers would have to pay for all gas company fixed costs, including infrastructure spending.

“The companies’ latest proposals demonstrate the gas utilities’ commitment to locking in massive investments in their fossil fuel systems as fast as they can despite the near certainty that technology and climate policy will render those investments obsolete,” Lapp said in a news release.

A BGE spokesman said Tuesday that the utility strongly disagrees with the report’s assertions, calling the findings at best a set of predetermined results wrapped in problematic analysis.

[ From July: Consumers face excessive long-term costs for gas regulator installations, People’s Counsel says]

For instance, the report relies on “unfounded and speculative assumptions” for what utility spending will be for the next 80 years or so, while BGE’s filings with the commission go out only three years, through 2026, said Nick Alexopulos, the BGE spokesman.

And using an assumed monthly consumption rate of 160 therms for bill calculations is unfair, he said, because it’s almost three times higher than the actual average monthly consumption rate of 57 therms.

“BGE has a responsibility to propose a path forward that allows continued safe and reliable energy delivery to our customers and helps Maryland reach its ambitious net-zero emissions goal,” Alexopulos said. “Our proposed 2024-2026 multiyear plan lays the foundation for this work while also considering affordability for our customers.”

Lapp said his office’s analysis uses conservative assumptions that are lower than the compounded annual growth reflected in utility filings in recent years.

A BGE proposal currently before the commission seeks to raise rates in each of the next three years for what the utility charges customers for delivery of both gas and electricity. The proposal would boost the delivery portion of the average residential customer’s monthly bill by about $31 after three years, BGE said.

Hearings on the utility’s proposals wrapped up in September, and parties have filed final arguments. Commissioners are deliberating and expected to issue an order by Dec. 14, said Tori Leonard, a spokeswoman for the commission, on Tuesday.

The People’s Counsel report makes projections through the end of the century, estimating that customers of BGE and the other two utilities would be expected to pay $206 billion from 2024 through 2100 for projected capital-related revenue requirements — the amount utilities must collect from customers to cover the cost of its distribution system.

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The report noted that much of those customer costs would be the result of investments made next year through 2045, when Maryland is aiming to reach net-zero emissions, or reaching a balance between the greenhouse gas emissions that are produced and that are removed from the atmosphere.

[ From August: PSC orders BGE to remove ‘electrification’ plan from rate increase proposal]

BGE’s capital spending plans have increased substantially, the report says. That is clear from updated capital-investment annual recurring revenue requirements, now estimated at $1.97 billion annually from 2024 through 2100.

Such massive investments in the gas distribution system pose a risk for customers, Lapp said.

“If they operated in a competitive market, they would not risk investor funds on a technology that is heading the way of the horse and buggy,” he said. “They are banking on utility customers — or eventually State taxpayers — to foot the bill.”

Alexopulos argued that an all-electric approach to achieving Maryland’s climate goals would end up costing consumers more than an integrated approach, such as relying both on electrification and gas, with gas shifting to a backup fuel source. That has been borne out, he said, in separate studies that energy consultants performed for the Maryland Climate Commission as well as for BGE.

He said studies also have shown that the monthly energy bill for combination electric and gas customers is projected to remain equal to or less than the monthly bills for all-electric customers.

Utilities’ capital investments have increased rapidly in part because of a program, approved by the General Assembly in 2013, in which gas companies planned wholesale replacement of most or all of their distribution systems, the People’s Counsel report said. But gas customers have paid only a fraction of long-term customer costs of those investments. Because those improvements have remained a focus of each company’s future capital investment plans, customers are expected to continue paying for them until about the end of the century.