The Maryland Public Service Commission yesterday rejected the Baltimore Gas & Electric Co.'s proposal for a new electricity rate structure design to reward customers who cut down their electricity use with substantially reduced bills.
The commission decided that the concept was fine but that the proposed rate structure would have the disadvantages of doubling minimum service charges and of increasing the electricity bill for an average household by 6 per cent.
The company was ordered to draw up another rate plan that would reward careful electricity users and to submit it to the commission. As a result of the decision, rates will remain unchanged at least through early fall for the company's 800,000 customers, 38,000 of whom are in Prince George's and Montgomery counties.
The designing of utility rate structures is an enormously complex undertaking that often causes disagreements among the experts. Here is what happened yesterday, according to spokemen for the company and the commission, which superviserutility rates in Maryland.
Under the current "declining block" rate system used by most utility companies in the Washington area and the nation, a customer pays less and less per unit for electricity as he uses more and more of it.Consumer groups and others have critized this system saying it penalizes those who use small amounts of electricity and discourages customers from conservation efforts.
Under the new "inverted rate" or "two-tier" system that some of these advocate - the essence if B.G. & E.'s proposed plan - the customer pays a set if amount for each unit of electricity used regardless of how much is used.
Thus unnecessary consumption becomes more costly, and the elimination of it saves the customer more money than he would save under the "declining block" system.
To make this concept work, Baltimore Gas and Electric found it necessary to increase the minimum monthly charge per customer - which must be paid regardless of how much electricity is used - from $1.89 to $3.93.
The commission, which had ordered the company to submit the new plan, did not find this acceptable. In analyzing the effect of the new rate structure on an average household, the commission found that its $65.96 average bill would have risen to $69.94 per month - also unacceptable to the commissioners.
The commission, ordered the company to go back and try again.
"We are at a loss to understand the commission's rejection . . ." said a statement issued by the company yesterday. "It would not have increased the company's revenues but represented a long and persistent effort to develop a new more equitable rate design."