The Maryland Senate yesterday enacted legislation designed to prevent utilities from suddenly adding steep fuel rate increases to consumers' electricity bills. Acting Gov. Blair Lee is expected to sign it into law.
The measure, prompted by a recent outcry from consumers stung by such increases in the "fuel adjustment charge," would force the utilities to go before the state Public Service Commission for permission before imposing increases of more than 5 percent.
Increases of that size have become relatively commonplace because of the rapidly fluctuationg cost of fuel in recent years. Potomac Edision customers in far Western Montgomery County and in Western Maryland have absorbed extraordinary fuel adjustment increases of as much as 1,000 percent because of the recently concluded coal strike.
Under current law, utilities need regulatory approval - including public hearings - only for increases in their basic rates.
Under the measure, passed by a 43-to-2 vote, utility companies must go before a PSC hearing within 30 days to justify passing to fuel costs. The companies must prove they purchased the cheapest fuel available and if there is a dispute, the burden of proof will fall upon the utility company rather than the consumer. If fuel costs drop by more than 5 percent, the utilities must also call for a PSC hearing to pass on the savings.
These fuel costs are listed in electricity bills under the fuel adjustment clause. During the Arab oil embargo, the General Assembly passed a law allowing utility companies to use the clause to pass on the escalating cost of fuel.
But in the intervening years, the clause has come to represent some 44 percent of an average electricity bill and it can change without review for six months.
A spokesman for Potamac Electric Power Co., which serves most of the Maryland suburbs of Washington, said last night that although he was not prepared to assess the full impact of the bill, "any delay in passing fuel costs to customers would place a heavy undue burden on Pepco."
Ultimately, he said, the company would have to borrow money to pay for the fuel and the costs of that borrowing would be eventually passed on to consumers in another form.
"This bill brings a little honesty and a few answers to people who have been hard-hit by fuel rate adjustments and haven't gotten those answers," said Sen. Harry J. McGuirk (D-Baltimore City) during an earlier Senate debate.
While consumer groups were lobbying for the bill in order to avoid sudden soaring electricity bills of last winter, utility companies were opposing it. Last month he said he would support such a measure, reversing his earlier opposition.
Consumers would be able to see whether utilities are "cheating, adding on, or playing games before the public gets the bill," said Del. John Arnick, (D-Baltimore County,) House majority leader.
Opponents of the measure have argued that if fuel costs continue to soar as they have, power companies could be forced to borrow money to pay for fuel while they wait for hearigs on increases in the fuel rate adjustment.