BGE wants Baltimore customers to pay more in response to city’s conduit rate hike

Baltimore Gas and Electric Co. announced it will ask city residents to pay more for their utilities — saying it’s a necessary response to Baltimore more than doubling what it charges BGE to rent space in the city’s underground conduit system.

The proposal, outlined at a news conference Tuesday, calls for city customers to face a surcharge of around $9 per month to accommodate conduit-related expenses.

The Maryland Public Service Commission, which oversees utility rates, must still approve the plan.

“This is a matter of doing what’s equitable for our customers,” Tamla Olivier, president and CEO of BGE, said in a news release. “Customers across central Maryland are already concerned about affordability, and our filing ensures that those costs remain where the city’s decision was made.”

BGE’s move makes good on a threat the company delivered in August, when Baltimore’s spending board approved a new rate structure for its underground utility network, known as the conduit. The increase — from $2.20 per linear foot to $4.05 — was approved unanimously in place of a standing agreement that allowed BGE to perform capital improvements on the city’s system in exchange for steeply reduced rent.

Brittany Jones, a vice president for BGE, told the spending board in August that staff for state regulators previously suggested BGE could target a conduit-related increase only to Baltimore customers rather than spreading costs across customers in the utility’s entire footprint.

She said at the time that city customers could see increases of $10 per month.

At the time, Baltimore officials scoffed at the idea, arguing such a targeted increase would be unprecedented for the Maryland Public Service Commission.

“The PSC, in the history of the PSC, has never approved a rate increase for just one jurisdiction,” Mayor Brandon Scott said then. “If they do approve your rate increase, it’s probably going to be for the entirety of the customer base. And for me ... my bill has already been increasing by more than $1 to $2 per month anyway.”

Baltimore officials argue they need increased investment from BGE to pay for the more than 130-year-old conduit system, which has experienced a series of explosive fires in recent years.

BGE has previously sued the city for attempting to increase conduit rental rates. The last lawsuit followed a rate hike in 2015, when Baltimore was attempting to more than triple its fee from 98 cents per linear foot to $3.33. The two parties settled a year later at a rate of about $2.20.

The 2023 agreement, quietly orchestrated by attorneys for the Scott administration and BGE, avoided such a legal conflict, but critics say it was overly generous to BGE.

When BGE makes capital improvements to the conduit system, such as replacing pipes and maintenance holes, customers cover the utility’s interest and profit on that investment for decades. Conduit rent, on the other hand, is an operational expense passed directly to BGE ratepayers without profit.

Scott faced significant blowback to the deal when it was struck. Comptroller Bill Henry and then-City Council President Nick Mosby boycotted the meeting when the agreement was approved, and Henry has since called it the worst decision of Scott’s six-year tenure as mayor.

First envisioned in the 1890s to hide unsightly and dangerous wires, Baltimore’s conduit is owned by the city but largely occupied by wires run by companies. BGE is the largest tenant, taking up more than 75% of the 741-mile system.

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 new rate.