A coalition of consumer advocates wants Maryland utility regulators to do away with a method of setting rates used by Baltimore Gas and Electric Co. that covers multiple years, saying the process has led to excessive rate hikes.

So-called “multiyear rate plans” have been allowed since 2020 through a pilot program.

“It’s time to cut our losses and end this flawed rate-making scheme before it causes more harm,” said Emily Scarr, a senior advisor at the watchdog group Maryland PIRG, during a press conference Wednesday.

Consumer advocates argue the pilot has led to reduced oversight of utilities and no incentive for them to stay on budget, to the detriment of consumers who then pay for investments, plus interest, for decades.

The pilot program has allowed BGE to request approval for rate increases in advance of spending, counter to the way rates have been set in the past, Scarr said. That removes regulators’ checks and balances on wasteful spending, she said.

But BGE said rate increases are due to required investments to meet state climate decarbonization goals and other needs, not to the structure of the rate setting plan. Multiyear plans are beneficial, the utility argued, letting utilities plan to meet future demand and maintain reliability while offering transparency before investments are made.

“Whether we have multiyear plans or we have traditional rate making, if the investments are occurring at that level, then the rates are going to reflect that ultimately,” said Mark Case, BGE vice president of regulatory and strategy. “It’s the utility investments to achieve the service to customers and the statewide goals that’s driving it.”

Case said 39 out of 50 states now use multiyear plans, particularly the states with the most aggressive climate goals. By contrast, BGE argued, traditional one-year rate cases are based on historical data, which may not reflect future needs and can lead to more frequent rate adjustments.

The Maryland Public Service Commission, which regulates utilities and sets rates, has scheduled a public hearing on the issue this month and will be accepting final comments through mid-December.

The commission set up the pilot with BGE believing the process could provide more predictable revenues for utilities and more predictable rates for customers. The method also was designed to spread changes in rates over multiple years and decrease administrative burdens on regulators by staggering what had been annual rate case filings.

Scarr was joined at Wednesday’s press conference by representatives of SEIU 1199 Healthcare Workers East, AARP Maryland and Chesapeake Climate Action Network.

They warned of long-term financial consequences if the state fails to end the pilot program.

“The more utilities spend on their infrastructure, the more they can profit,” Scarr said. “This means a powerful incentive for wasteful spending.”

She cited a report by the Maryland Office of People’s Counsel that found that since the pilot’s adoption, BGE electricity delivery rates have increased by 26% and gas delivery rates have increased 43%, far outpacing the rates of increase before the pilot. With higher energy commodity prices looming, Scarr said, consumers can expect to be hit with even higher bills.

That’s a scary prospect for Nina Scroggins, an SEIU 1199 member and Baltimore resident who works as a cook at Greater Baltimore Medical Center in Towson.

“I don’t want Baltimore city residents to endure the hardship of their lights or heat being cut off,” Scroggins said during Wednesday’s event. “I understand the burden myself.”

Scroggins said that several years ago after her son was born and she was working only part-time, she struggled to pay expenses.

“I came home one day, and my gas and electric was cut off,” said Scroggins, who then feared she’d be evicted from her apartment. “With the help of my family, we got my BGE back on and I promised myself that would never happen again. … A lot of families do not have someone to help them.”

Multiyear plans have led to consumers being at risk for higher rates, regulators having less ability to protect them and more people facing utility service disconnections, said Laurel Peltier, an AARP Maryland utility advocate during Wednesday’s event.

“Increasing utility bills affect individuals’ ability to buy food, to save money, to pay for other essential expenses, such as child care and expenses,” said Brittany Baker of the Chesapeake Climate Action Network.

BGE’s Case argued that despite increases, the utility has maintained competitive rates compared with nationally or regionally and that average bills have gone down since 2016 in part because of energy efficiency.

The commission last authorized a BGE rate increase in December. Those rates, which took effect Jan. 1, raised rates over three years by an average of more than 3% a year, boosting the average customer’s monthly bill for delivery of both gas and electricity by about $21.83 after three years.

The higher rates translated into just under a $408 million increase over the three years in both electric and gas service revenue for the utility’s capital expenses.

In April, BGE sought to recover another $152 million in costs that exceeded the state’s cap for 2023, as part of a regulated process to reconcile rates the commission previously set for 2021 through last year. The commission is reviewing that request.