Maryland PSC ends multi-year rate plan pilot program, cites lack of customer benefits

MARYLAND (WBFF) — The Maryland Public Service Commission (PSC) issued an order Thursday ending its multi-year rate plan (MRP) pilot program after finding the program’s intended goals were “largely unachieved” and the utilities didn’t show customer benefits of their capital infrastructure project spending.

Under MRPs, the Office of the People’s Counsel said utility rates are set based on a utility’s forecast of projects and anticipated spending instead of actual investments that the utility has proven “reasonable and prudent” and that are giving real value to customers.

ALSO READ | Consumer advocates raise concerns over BGE’s latest $156 million rate hike request

“We applaud the PSC for putting an end to the current pilot program,” Maryland People’s Counsel David Lapp said via press release. “As the PSC’s order confirms, MRPs have made rate cases more complex, increased administrative burdens, and frustrated regulatory oversight. Our experience also shows that customers paid much more under MRPs than under standard ratemaking that uses actual costs.”

The pilot program was originally established for Baltimore Gas and Electric (BGE). Potomac Electric Power Company (Pepco) and Delmarva Power & Light Company later field MRPs under the same framework.

“Unfortunately, despite the PSC’s findings, new ratemaking practices based on utility forecasts are still possible in the future, which will require putting more resources into a fundamentally flawed approach,” Lapp said.

Although the current pilot program is ending, the PSC’s order does not complete the evaluation of alternative forms of ratemaking.

Now, the Utility RELIEF Act requires the PSC to submit a report by April 1, 2027, assessing whether forecasted test year ratemaking, standard ratemaking or a hybrid model is in the best interests of ratepayers and protects them. The order provides more guidance for the work group created in Public Conference 83, which will provide recommendations for the PSC. The work group’s first-phase recommendations are due by Feb. 1 of next year. A second phase will look at possible changes that the PSC’s order says could produce a “more refined and substantially reformed” MRP framework. That report is due June 30, 2027.

A BGE spokesperson told FOX45 News that the utilities support strengthening the ratemaking process and putting more focus on customer value.

“BGE, Pepco, and Delmarva Power are committed to working with the Commission and stakeholders to develop an approach that supports keeping bills low, the lights on, and the gas flowing for customers across Maryland,” a BGE spokesperson said in a statement to FOX45 News.

Read the129-page order in full above