The Maryland Court of Special Appeals has ruled that Baltimore Gas & Electric must refund $6 million to its customers, a decision that supports the state Public Service Commission's expanded interpretation of its power over utility fuel costs.
The state's second-highest court upheld a commission decision to assess the power company for additional fuel expenses caused by two maintenance malfunctions at the Calvert Cliffs nuclear plant, located in the town of Lusby in Calvert County.
Yesterday a BG&E spokesman said the utility company plans to appeal the court decision, which was made Nov. 15. The ruling also could expose the other companies in the state, Delmarva Power and Potomac Edison Power Co., to closer scrutiny by Maryland's Public Service Commission.
According to Gary Alexander, the Office of People's Council representative, the case grew out of a power outage in 1980 caused by a bolt accidentally being dropped into a turbine. The mishap left the Calvert Cliffs plant closed for 17 days. A second maintenance problem occurred the following year, causing the plant to close for several days. In each instance, Alexander said, more expensive sources of power had to used and the additional cost of $6 million was passed on to about 700,000 customers throughout the state.
The Public Service Commission and now the appeals court have ordered BG&E to refund those costs by charging its customers less for fuel in the future. In addition to a base charge for power services, utility companies charge customers for fluctuating fuel costs, which are listed separately on the monthly bill. It is this charge that may be reduced as a result of the court's ruling.
In court last spring, BG&E maintained that since it had a good record for providing service, it should not be penalized for maintenance problems that caused the outages.
"We maintained an adequate level of power generation. . . . We got awards for our generation at Calvert Cliffs," said BG&E spokesman John Metzger. The utility's position was upheld by Calvert County Circuit Court Judge Perry Bowen, who ruled that the Public Service Commission had exceeded its regulatory authority by examining how the outages could have been avoided, then deciding that BG&E had to absorb the additional costs.
But the appeals court disagreed, saying a 1978 law "was designed to permit the commission to subject the fuel rate to greater scrutiny and regulation." The law also allows the Public Service Commission to determine what rate increases are "properly passed on to the consumer" and to consider whether facilities are being well managed. Therefore, the court wrote, "We hold that the actions of the commission in these cases were neither unreasonable nor unlawful."
The court's decision was hailed as a victory by Kirk Emge, general counsel for the state Public Service Commission. He said the decision allows his organization to "better protect the consumer. . . . We think the commission should look at outages as well as overall performance" of utility companies.
"This is a very important proconsumer decision," Alexander said yesterday. He said the commission is likely to review more carefully the operation of power plants when considering applications for rises in fuel charges. "The efficiency of the plants determines the level of what the customer has to pay for the fuel rate."