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Md. General Assembly wades into battle over utilities, likely sending gas bills higher

Vapor and liquid natural gas lines are shown at the Dominion Cove Point LNG Terminal in Lusby, Md on Oct. 9. (Ricky Carioti/The Washington Post)

If you live in Maryland, your natural gas bill is likely to rise by $2 a month under a bill expected to pass the General Assembly as early as this week.

The price hike, which could go into effect this summer, would allow gas companies to accelerate improvements to aging pipelines that carry a combustible substance near neighborhoods and schools. Maryland ranks ninth among states with the most aging cast-iron pipes, according to the industry.

But opponents say that the measure — versions of which have been rejected repeatedly by independent state regulators — could mark the beginning of the end for Maryland’s system of regulating the gas industry.

If approved, the legislation would allow gas companies to charge customers for upgrades — before the work is actually done, and separate from the state’s usual system of setting residential rates.

“This is about ending the structure of regulation that we have had for a century in Maryland,” Sen. Richard S. Madaleno Jr. (D-Montgomery) said on the Senate floor Thursday in urging colleagues to vote against the legislation. “Remember, these are monopolies . . . and in exchange for having a monopoly we highly regulate these industries so they don’t rob us blind.”

Consumer advocates, the Office of the People’s Counsel and AARP have successfully urged lawmakers to oppose the measure in the past. But both the House and Senate easily passed identical versions of the bill Thursday, and now the two chambers are a few procedural steps away from sending the legislation to Gov. Martin O’Malley (D).

The governor has not said whether he will sign it. But allowing a surcharge for a limited number of improvements, and with strong oversight from state regulators, was a recommendation of a task force he set up last year to study power failures in the state.

Gas and electric companies have asked for the prepayment system at least five times since 2009. Each time, Maryland’s Public Service Commission has declined, forcing utilities to perform the work first, then justify in a court-like proceeding why they should receive extra compensation from ratepayers when shareholders are already earning a profit.

The legislation has received far less attention than another proposed surcharge on utility bills: O’Malley’s plan to require electric customers to subsidize operation of an offshore wind farm in the Atlantic Ocean.

Sen. John C. Astle (D-Anne Arundel) said that the bill is primarily about public safety and that concerns about it are overblown.

“I feel like the warden in ‘Cool Hand Luke,’ ” Astle said during the Senate’s second lengthy debate about the measure last week. “What we have here is a failure to communicate, a failure to communicate that this is not a bad bill.”

Astle and other proponents on the Senate Finance Committee pointed to statistics that indicate Maryland is worse off than many others when it comes to aging pipelines. They also said that most states allow such a program. Astle stressed that the PSC did not take a position on the bill this year, after opposing it in two previous years. A provision in the latest version would require gas companies to get PSC authorization to begin the surcharge.

Sen. James C. Rosapepe (D-Prince George’s) fired back at Astle, saying that he thought advocates had done a fine job of communicating. “It’s really clear: the gas companies really want this bill, and the residential advocates and consumers’ groups do not,” Rosapepe said. “I’d like to take out a loan and have someone else pay it back — everybody would like that. It’s a great deal for the gas companies.”

Washington Gas Light supports the bill.

“Of the eight states with larger amounts of cast-iron pipe, seven have accelerated pipeline programs similar to what this bill would establish,” the company said in written testimony. It stressed the need for upgrades for safety.

According to the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, there were 30 “significant incidents” involving gas lines in Maryland from 2002 through 2011, causing one fatality, 16 injuries and $12 million in property damage.

“We cannot avoid the undeniable fact that the significant portion of the entire nation’s energy infrastructure is old and Maryland is no exception,” Washington Gas said.

But some lawmakers said that the gas industry was being held to a different standard than electric companies, including Pepco. The utility has been denied similar programs and been fined record amounts by the state for falling behind in maintenance of its system. Shortcomings in Pepco’s system have been blamed for widespread outages in the Washington area.

Pepco, which is again seeking a similar prepayment program, citing the recommendation of O’Malley’s task force, did not take a position on the bill.

Kate Havard contributed to this report.

Aaron Davis covers D.C. government and politics for The Post and wants to hear your story about how D.C. works — or how it doesn’t.



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