Baltimore to scrap controversial deal that let BGE profit from city utility system

Baltimore leaders plan to scrap a deal with Baltimore Gas & Electric that allowed the company to profit off improvements it makes to a city-owned underground utility network.

It’s a reversal for Mayor Brandon Scott, whose administration pushed for the agreement three years ago over the objections of other city leaders.

If approved by its spending board, the city would pick back up with capital improvements and BGE would resume paying full rent to the city, administration officials confirmed to The Banner.

The move signals an impasse in negotiations between city officials and BGE over maintenance and improvement responsibilities for the underground system of tubes that is better known as the conduit. City officials asked for increased investment from the utility company during those negotiations.

“BGE did good work, meeting their obligation under the 2023 agreement, but with the additional investment we need to make, it’s important the city leads,” said Deputy Mayor Khalil Zaied.

The 2023 deal allowed the utility to tack hundreds of millions of dollars onto customer bills over the coming decades, although in early years ratepayers paid less because the city slashed the fees BGE paid to lease conduit space.

That agreement was set to renew at the end of the year. Last month, however, the Scott administration pumped the brakes, notifying BGE that it intended to renegotiate.

Days later, The Banner published a story examining the origins of the deal, the confusion that surrounded its passage, and how it would likely cost BGE ratepayers more money over time.

When BGE makes capital improvements to the conduit system, such as replacing pipes and manholes, customers pay the utility interest and profit on that investment for decades. By contrast, BGE’s conduit rent is an operational expense passed directly to ratepayers without profit.

In renegotiating with BGE, the city had been asking the company for more investment in the conduit system, Scott said in an interview last month.

“Yesterday’s price is not today’s price,” he said.

City officials said a recent spate of fires inside the conduit underscored the need for greater investment in improvements.

Before the 2023 deal was inked, BGE paid about $27 million annually in conduit fees. The utility occupies more than 75% of the space in the conduit system.

Going forward, BGE would pay $4.05 per linear foot, the administration is proposing. That’s a near doubling over the rate prior to 2023.

Other conduit lessees include telecom companies, such as Comcast and Crown Castle, which owns fiber lines and cellphone towers. Those companies would also be charged the proposed new rate, officials said.

BGE and the city have sparred for years over what should be the appropriate rental fee for the conduit, a fight that has taken both parties to court.

In 2015, as BGE’s rental agreement with the city was about to expire, BGE offered to buy the entire system for $100 million. Baltimore rejected the offer and instead attempted to triple conduit rental fees.

BGE accused the city of price gouging, refused to pay and sued Baltimore. They settled a year later, with the company’s annual conduit fees roughly doubling to about $2.20 per linear foot. That seven-year agreement expired in 2022, which led to Baltimore’s conduit deal with BGE the following year.

Approved less than a month after it was made public, the 2023 agreement with BGE was met with opposition. Comptroller Bill Henry, who typically aligns with Scott politically, told The Banner that he could think of no worse decision made by the mayor since he took office in 2020.

Henry and then-Council President Nick Mosby boycotted the February 2023 meeting when the deal was approved. They did so with the understanding that the five-member board, controlled by the mayor and two of his appointees, could not be held without them.

Instead, Scott and his appointees pressed forward, citing an impending regulatory deadline for their haste.

Of the new proposal, Henry said he was pleased to see the administration asking for a rental fee that would be enough for “reasonable” improvements.

“I am glad that we are resuming a normal franchise relationship with BGE,” he said.

Council President Zeke Cohen, who was critical of BGE’s work under the current agreement in an interview last month, said he supports the new proposal.

BGE and Baltimore leaders agree that the conduit is sorely in need of improvement. First envisioned in the 1890s to hide unsightly and dangerous wires, about 80% of the system is still made of either terra-cotta or Orangeburg, an outdated material made of wood pulp. Updated sections are made of more modern PVC pipe.

A 2025 report, commissioned in response to underground explosions that blew manhole covers and swallowed a Charles Street bookstore, found numerous deficiencies in the aging network that make it prone to fires.

City officials said they plan to reconstitute Baltimore’s conduit division, which has been operating at a smaller size since 2023, by the end of the year to handle additional work in-house.

Banner reporters Giacomo Bologna and Hayes Gardner contributed to this story.