Maryland power companies may return $160M in tax refunds to customers

Utility companies Baltimore Gas and Electric, Delmarva Power and Pepco are seeking regulatory approval to provide $160 million in tax refunds to customers, though the companies say it’s too early to know exactly how that’ll show up on Marylanders’ bills.

The tax savings would include $110 million for BGE customers, $20 million for Delmarva Power customers and $30 million for Pepco customers, the Exelon-owned companies said in a release Monday. The proposed refunds follow a court ruling this summer that ordered the state to pay $250 million back to the energy companies.

The Public Service Commission, an independent state agency that regulates the utility industry, will review the proposal and determine the timing, structure and allocation of the refunds. Nick Alexopulos, a spokesperson for BGE, said it’s too early to say how much money each customer would get.

BGE said in the release that it hopes the tax savings provide relief to customers who are “feeling pressure” from higher energy costs. BGE is seeking to raise its customers’ electricity rates by $8 a month, saying in a rate filing that the increase is necessary to “sustain a safe and reliable system.” State regulators are still reviewing the proposed rates, which, if approved, won’t take effect until at least January.

Utility costs are skyrocketing in Maryland, making it harder for customers to keep up with their bills, advocates say. Residents had their natural gas or electricity service shut off for nonpayment nearly 115,000 times last year, an increase from just over 100,000 instances in 2024.

In July, the Supreme Court of Maryland ordered the Office of the Comptroller to issue more than $250 million in tax overpayments to the energy companies. The court found that the equipment that energy companies use to transmit and distribute electricity qualifies for the state’s sales and use tax exemption.

Comptroller Brooke Lierman said in a news release last week that she disagrees with the court’s interpretation. The refund will amount to more than $250 million in overpayments on taxes and interest, she said.

“When utilities pay taxes, they recover those taxes through the rates that they charge their customers,” she said. “Therefore, this money that is a refund of taxes paid and interest paid on those taxes, belongs to ratepayers.”

Lierman said energy companies should issue credits to all ratepayers for the full amount of taxes being refunded.

BGE has more than a million customers across the Baltimore region, while Pepco serves more than 600,000 in Montgomery and Prince George’s counties and Delmarva serves more than 200,000 on the Eastern Shore.