Why BGE thinks city residents should pay higher utility bills than county residents

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 starting in January to accommodate conduit-related expenses.

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

BGE president and CEO Tamla Olivier said the city’s decision to raise conduit fees by 84% was “ridiculous” and “unsubstantiated.” She called it a “money grab.”

“I’m not okay with it,” Olivier said. “And our customers shouldn’t be okay with it.

Baltimore Mayor Brandon Scott, City Council President Zeke Cohen and Comptroller Bill Henry called the proposed surcharge a “disappointing but unsurprising” attempt by the utility to avoid paying its fair share of conduit costs.

The Baltimore leaders asked the Public Service Commission to “reject this illegal and unprecedented request from BGE and fulfill their responsibility to the people of Baltimore City, to protect them from corporate overreach.”

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 that 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.

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,” Scott said then.

On Tuesday, Olivier accused city officials of being flippant when they say, “It’s only a few dollars.”

“You want to tell that to somebody who’s deciding whether or not they’re going to pay their rent or their electricity bill? Or the car note? Or their kids’ daycare?” she said.

BGE already has a request before state regulators for a separate rate increase that would amount to $8 per month for the average residential electric customer.

Baltimore officials have argued 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.

But Olivier said the city currently has $0 set aside for capital improvements to the conduit in its 2027 budget — and that’s not the worst of it. Olivier said the city has a history of treating the conduit funds like a piggy bank, taking money out of it and using it for a variety of unrelated projects.

The conduit system is “literally crumbling under our feet,” Olivier said, and BGE would do a much better job fixing it than the city. She said the city has refused to provide any information about past repairs to the conduit.

“Show us the work,” Olivier said. “Where did the money go?”

This is not the first time BGE and the city have clashed over conduit rental rates. BGE sued the city for attempting to increase rates after a 2015 rate hike. At the time, 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.

In 2023, the city struck a new arrangement with BGE. That deal, quietly orchestrated by attorneys for the Scott administration and BGE, avoided another lawsuit, 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. 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.

However, it was Cohen who received the most criticism from Olivier by far. The utility CEO mentioned him on three separate occasions during Tuesday’s press conference.

Olivier said that Cohen, a frequent BGE critic, should look into the city’s own conduit division before criticizing the utility company.

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. Those companies would also be charged the new rate.