Consumer, environmental and labor advocates are backing a state proposal that would force Baltimore Gas & Electric Co. to rein in the replacement of gas delivery pipelines, arguing that unnecessarily high utility investments have sent bills skyrocketing without improving safety.

Advocates gathered Tuesday at Baltimore City Hall with state and city elected officials to call for changes to a 2013 state law that allows gas utilities to recover the cost of spending on gas infrastructure replacement projects by passing them on to customers.

“We’re here today to call on the Maryland legislature to provide utility customers relief and to end wasteful gas utility spending” by passing the Ratepayer Protection Act, said Emily Scarr, of Maryland Public Interest Research Group. “BGE’s gas delivery rates have escalated to crisis levels.”

The proposed legislation, sponsored by state Del. Elizabeth Embry, a Baltimore Democrat, would require utilities to prioritize targeted repairs such as finding and fixing gas leaks and pull back on wholesale pipeline replacement.

Embry was joined at a Tuesday news conference by Maryland Attorney General Anthony Brown; People’s Counsel David Lapp, whose office represents Maryland ratepayers; Baltimore City Council President Zeke Cohen and others.

BGE is owned by Exelon Corporation, a utility company with a more than $40 billion market cap.

In 2023, 80,000 BGE customers had their power shut off after falling behind on bills. And safety has not improved, they say, citing federal data showing BGE’s hazardous leaks per year increasing from 2,400 in 2011 to more than 4,000 in 2023.

Heating accounts for more than 40% of a home’s energy consumption. The seasonal increase in energy use, combined with extreme cold in late December and throughout January, is being reflected in bills, the utility said.

Ricarra Jones, political director of 1199 SEIU, a union that represents more than 10,000 health care workers in Maryland and Washington, D.C., said members have worried about how they’ll pay high bills, including some that have jumped from about $250 this time last year to $500 now.

Brown called the escalating rise in energy prices “an ongoing emergency.”

“Too many Marylanders can’t afford to keep their heat running and their lights on,” said Brown, a Democrat. “The crisis has only gotten worse … Because of rate increases from BGE at the beginning of this year, now it’s even harder for Marylanders to pay their utility bills.”

Without safe and reliable services at a price people can afford, “the General Assembly should step in,” he said.

Gas delivery rates, which make up one portion of customers’ utility bills along with electricity delivery and power supply, are tied to BGE spending, representatives of Maryland PIRG and other advocates say. Increased spending boosts both a utility’s profits and customers’ costs.

The Office of People’s Counsel says wasteful spending has caused BGE gas delivery rates to triple since 2010, and those rates increased again Jan. 1. Meanwhile, Maryland PIRG said, BGE profits tripled from $147 million in 2010 to $485 million in 2023.

Cohen, a Democrat, said his office has heard from residents facing unsustainable increases in BGE bills and facing shutoffs, including a family with an infant during extreme cold.

The City Council has said it plans to take action over the next few months to support residents who are struggling to pay utility bills. He said he plans to call a series of council committee hearings this week on utility rates.

“In this house, we do the people’s business,” Cohen said. “We do not do BGE’s shareholders’ business.”

Spending on infrastructure continues amid rate hikes

BGE has spent $1.4 billion on its gas pipeline replacement program in the last decade, enabled by the so-called STRIDE law, the group said. BGE’s distribution charge, included in rates, is reviewed and approved by the Maryland Public Service Commission.

BGE said in an email Tuesday that both state and federal policies direct utilities to not only maintain, but improve and upgrade aging natural gas infrastructure to enhance public safety and reduce environmental risks.

BGE said it replaces less than 1% of its gas system in any given year, focusing on the oldest, most leak-prone parts. Maryland lags behind peers in replacing aging gas systems, a company spokesman said.

“BGE customers are served by the oldest natural gas pipeline system in the country, and it is in need of upgrading,” said Nick Alexopulos, a BGE spokesman. “Legacy natural gas pipeline infrastructure is more prone to leaks, posing safety and environmental risks. Replacing outmoded pipes with modern materials aligns with public policy and is the right thing to do for our customers and the environment.”

BGE’s natural gas distribution system has more than 900 miles of aging bare steel and cast iron mains, infrastructure that is decades or sometimes more than a century old. About 80% of the outmoded system is located in the city.

The utility said most reasons for higher energy costs “have nothing to do with BGE” and that blaming the utility’s gas system maintenance ignores the impact of higher usage and market forces caused by insufficient in-state power generation.

BGE said the cost of supplying gas and electric services are out of its control. The price of natural gas was 30% higher in January than it was during the same period last year.

Maryland PIRG pushed back on BGE’s response, countering that in-state power generation from coal plants, gas plants or renewable energy has an impact on electricity bills, not gas.

Embry said People’s Counsel Lapp “raised the alarm” years ago on the impact the STRIDE (Strategic Infrastructure Development and Enhancement Plan) would have on ratepayers down the road, publishing several reports on anticipated impacts, and called him “the hero of this bill.”

Embry said the bill would not repeal the STRIDE law, but adjust it to focus on safety and cost reduction, not wholesale replacement.

A People’s Counsel report out in November 2023 showed that BGE was 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.

“STRIDE reform is the single most important action that Maryland can take to address the massive utility bills customers are facing today,” Lapp said during Tuesday’s event. “Our office, state agencies and elected officials are being flooded with calls from customers who are now seeing the devastating impacts of 10 years of the STRIDE program with its promotion of aggressive gas infrastructure spending.”

BGE’s profits irk consumers with higher bills

Unlike businesses that compete on the open market, Lapp said, utilities generate profits by spending customer money.

“If they can persuade the government to endorse more spending through statutes or regulations, captive utility customers are stuck paying more for growing investor profits even if that spending is unwise or unnecessary,” he said.

The current STRIDE law, unchanged since 2013, supports building new gas systems, “but these gas systems are built for the horse and buggy. Today household gas appliances face declining markets due to stiff competition from modern electric appliances.”

BGE still has about $3 billion in planned future spending to replace its aging gas system, meaning Maryland gas customers stand to see their gas delivery rates double in the next decade.

BGE countered that customers want gas service, with 70% opposing a ban on natural gas.

Embry’s bill is the latest in a series of proposals by lawmakers aiming to address the affordability and reliability of the state’s energy resources.

At a separate news conference Monday, Maryland Senate President Bill Ferguson, a Baltimore Democrat, said that the state’s plans to shift to a “net-zero future” will take planning and stability and should not come at “an impossible cost to Marylanders.”

A package of bills seeks to reduce utility costs for customers while taking action to generate energy in-state by pursuing greener pathways, like wind, solar, water and natural gas.

Officials and advocates who came out in support of Embry’s bill Tuesday argued that utility bills have become so unaffordable that many people must choose between heating their homes or paying for gas or groceries.

BGE said it is taking steps to help customers, including waiving late payment fees for January and February, suspending disconnections for nonpayment in February and working to more quickly reconnect previously disconnected customers.

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