BGE Customers to Face Heftier Energy Bills in June

By John Wagner and Avis Thomas-Lester
Washington Post Staff Writers
Thursday, May 24, 2007

Residential customers of Maryland's largest electricity provider, Baltimore Gas and Electric, could see their bills increase by as much as 50 percent starting next month under a plan that state regulators said yesterday they approved "with reluctance, but with little legal option."

The Public Service Commission also agreed to an optional phase-in plan that would allow consumers to defer a portion of the increase interest-free. Under that plan, rates would rise only about 38 percent in the coming year, but the difference would have to be paid on future bills.

Commission Chairman Steven B. Larsen said he had concerns about the effect of the increase on people with low incomes, but he said the commission had no legal basis to deny the increase as Maryland transitions to market prices after years of capped rates.

"At the end of the day, we're bound by the facts and the law that were presented to us," Larsen said.

BGE serves about 1.1 million customers in central Maryland, including Anne Arundel and Howard counties and a slice of Prince George's County. A 72 percent increase proposed by the company last year led to a special session of the General Assembly, in which lawmakers limited the immediate increase to 15 percent.

Then-Baltimore Mayor Martin O'Malley (D) used the increase in his successful campaign to unseat Gov. Robert L. Ehrlich Jr. (R) last year. Yesterday, Republicans struck back, saying O'Malley -- who has replaced a majority of the commission members since he took office in January -- was no more successful than Ehrlich, despite his campaign rhetoric, in reining in utility prices.

For BGE residential customers who do not accept the deferment plan, a typical bill using 1,000 kilowatt-hours a month would increase from about $92 to $139.

Customers served by Pepco, which provides electricity to almost 500,000 residences in most of the close-in suburbs in Montgomery County and Prince George's suburbs, can soon expect a more modest increase.

Pepco spokesman Robert Dobkin said the company is waiting for approval from the commission for an increase of 5.8 percent that would reflect higher fuel costs. The increase, which the company has told consumers is coming, would raise a typical bill for a residential customer using 1,000 kilowatt-hours a month from $128.95 to $136.43, he said.

A separate request pending before the commission would raise the bill an additional 3.9 percent to cover higher distribution costs, making a typical bill more than $141 a month.

Pepco customers in Maryland absorbed much larger increases last year, when a 39 percent increase in the total bill took effect June 1.

In the District, about 250,000 Pepco customers are facing an increase of almost 12 percent, with the typical bill for a residential customer using 750 kilowatt-hours a month slated to rise from $73.63 to $82.17, Dobkin said.

Dominion Virginia Power has asked state regulators for permission to raise rates this year by about 4 percent to cover rising fuel costs. That would go into effect July 1 for Dominion's 2.1 million customers in Virginia, including 780,000 in the Washington region.

The increase would raise a typical bill for a residential customer using 1,000 kilowatt-hours a month from $87.18 to $90.59.

In Maryland, the rate shock is largely the result of 1999 legislation that sought -- unsuccessfully -- to foster competition among residential providers in Maryland and froze rates for several years. The freeze in the BGE territory expired last July, prompting the company to return to what it said were market rates -- but the move outraged consumers.

In a 105-page order explaining its decision, the Public Service Commission noted that in public hearings, its members had been urged to continue a rate freeze while broader issues affecting electricity prices were more fully investigated. But the order said the legislation passed last year limiting this year's increase to 15 percent did not allow that. The law passed by the legislature explicitly says rates should reflect the market by January.

Word of the increase angered some BGE customers.

Emma Hawes, a retiree in Bowie, said she might curtail using air conditioning. Her summer electricity bill typically runs $150 to $175. The increase would push it over her comfort zone.

"I'm already paying enough," she said. "My gas bill was unbelievable this winter, and everybody knows what is happening with gasoline at the pump."

Carol Gordon of Crofton said her monthly bill averages $130 when she's not using air conditioning or heat, and about $230 during the winter and summer. With the increase, she expects to pay about $200 during low-usage periods and about $350 in very cold and very hot weather.

"This is not good, not good at all," said Gordon, who lives in a single-family home.

During last year's campaign, O'Malley accused the commission, which then had a majority of Ehrlich appointees, of "rubber-stamping" BGE's rate request. Yesterday, the tables were turned.

"O'Malley's pledge to hold the line on rate increases and help working families was a false campaign promise," state GOP Chairman James Pelura said in a statement. "His lack of visibility on this issue shows he will do and say whatever it takes to get elected."

O'Malley spokesman Rick Abbruzzese said O'Malley was reviewing the commission's order but said it suggests that "right now, there is no incentive for BGE to keep rates down. That must be changed. And we need to ensure that we provide help to people living on low and fixed incomes."

In a statement, BGE said that during the time rates have been capped in Maryland, "global energy prices have soared for all fuel inputs, resulting in significantly higher costs for electricity. However, even after the price moves to market rates, BGE's total rate for electricity will still be lower than major metropolitan centers in the Mid-Atlantic and Northeast regions."