It’s Time for The Maryland Legislature To Seize the Moment and Lower Energy Bills

Maryland residents are facing an affordability crisis. Utility bills are rising as the cost of living increases, straining already stretched households and businesses. The gas rates of BGE and Columbia Gas have increased significantly since 2010, with BGE’s rates tripling during that period and Columbia Gas rates increasing more than three times the inflation rate. Electric rates for Maryland’s Exelon utilities have also increased above inflation rates. Unfortunately, this problem isn’t going to get better soon. According to BGE, Marylanders should expect to see another combined increase for gas and electric service of over 12% by June 2025 — this will look like an additional $26 on a $210 residential bill.

The good news is the General Assembly has an opportunity to reduce the strain on ratepayers this legislative session by passing three key bills to rein in utility spending, increasing energy affordability, and secure Maryland’s energy future.

Ratepayer Freedom Act

Maryland’s monopoly electric and gas utilities are using the money they collect from customer bills to fund political machines that push legislation, curry favor with regulators, and alter the outcomes of elections. While utilities are barred from charging ratepayers for lobbying expenses, they often circumvent these rules by using trade associations to lobby on their behalf. These costs should be charged to shareholders, but loopholes that define “lobbying” very narrowly, leaving ratepayers on the hook for utility spending that is not in the public interest nor necessary for providing safe, affordable, and reliable utility service.

Utilities are savvy. They know that if ratepayers were aware that when they paid to keep their house warm, they were also paying for an executive to go on a work trip or for a trade organization to lobby against climate policies, there would be a public outcry. That’s why the utilities make none of these expenses obvious when they request rate increases in filings before the Public Service Commission (PSC). Right now, the only method to discover improper customer charges relies on consumer advocates and staff from regulatory agencies to diligently sift through thousands of pages of regulatory filings and reports, identify potentially problematic expenses, and then dispute them. These disputes are often met with resistance from the utility. This is a very hit-or-miss process that exacerbates the chances that customers’ utility bills will include such costs.

We need to protect consumers from these unnecessary costs by requiring utilities to only charge customers for services that help deliver safe, affordable, and reliable service. The Ratepayer Freedom Act will protect ratepayers by prohibiting utilities from charging ratepayers for expenses that simply do not benefit them. The long overdue law would prevent monopoly utilities from spending ratepayer money on lobbying, advocacy, political groups, unnecessary advertisements, chartered aircraft, entertainment, and gifts. It will also require monopoly utilities to file transparency reports with the PSC.

Ratepayer Protection Act (HB 419)

In 2013, the Maryland General Assembly enacted the STRIDE statute, which authorizes Maryland gas utility companies to spend ratepayer money on gas pipeline investment plans. While spending money to replace aging pipes might sound good, STRIDE is not a safety program. Instead, it is a financing mechanism that allows gas utilities to recover a substantial portion of their gas pipeline replacement expenditures through a monthly surcharge to customers rather than waiting for a rate proceeding. The STRIDE law did not establish any new safety requirements or change the utility’s obligation to provide safe service. Instead, it created a perverse incentive that encourages utilities to increase their spending on unnecessary projects to increase their profits without improving safety.

Without significant changes to the STRIDE program, Maryland gas utilities are on track to spend tens of billions of dollars replacing their local distribution systems and expanding pipeline capacity. For example, BGE is eight years into its gas pipeline replacement plan, expected to be completed around 2039. In 2018, BGE received the PSC’s approval to spend more than $720 million in infrastructure replacement over the five years from 2019-2023. The utilities’ customers would be on the hook for $125 billion based on current regulatory treatment.

The Ratepayer Protection Act gives the Commission new tools to ensure that ratepayer money is spent responsibly by codifying requirements on safety and cost-effectiveness. The bill requires gas utilities to consider non-pipeline alternatives, ensure cost-effective spending, prioritize safety, use modern leak detection technology, and apply a “fix it first” approach. These modest reforms will ensure STRIDE meets its intended goal of improved safety without wasteful spending.

The Abundant Affordable Clean Energy Act (AACE) (SB 318) (HB 398)

While policymakers have made steady progress toward a future where renewable energy is supported by a reliable electric grid and widely available to consumers at a low cost, that progress is being stymied by the failure of Maryland’s grid operator to do its job adequately. Maryland is part of an electricity grid shared by 13 states and the District of Columbia, managed by PJM Interconnection (PJM). PJM aims to ensure these states have access to sufficient and affordable energy. In high-demand periods, when PJM is worried the grid cannot generate enough electricity, the price of electricity increases.

Right now, PJM is not doing its job correctly. New energy projects looking to come online in the PJM region face years-long wait times before they’re even considered, and wind, solar, and battery projects account for 95% of the 250 gigawatts in its interconnection queue. This failure directly affects energy affordability. PJM’s latest annual electricity market auction produced an 800% price increase for energy, which could increase customer bills by as much as 29% starting mid-2025.

The AACE Act represents a creative approach to improving energy affordability in Maryland.

By enacting the AACE Act, the General Assembly can meet the rising demand for electricity with less expensive clean energy technologies like battery storage. In Maryland, distributed energy, like batteries, doesn’t have to go through the same arduous approval process as other energy sources. By increasing the amount of available battery storage, we can meet peak energy demand while saving the state money from avoided costs of costly grid upgrades. Plus, battery storage is a game changer for electricity and renewables.

The bill would also reform Maryland’s broken solar crediting process to make credits more flexible and targeted for different types of solar projects instead of providing unnecessary subsidies that drive up prices, allowing the state to scale solar projects while protecting customers in Maryland.

Energy affordability is within reach

This year, the General Assembly can put money back into the pockets of families. Maryland legislators can pass legislation that prevents the cost recovery of inappropriate utility expenses while ensuring greater transparency. They can redesign STRIDE to achieve its intended purpose — ensuring the replacement or repair of leaking gas pipelines rather than replacing the entire costly gas system with no benefits to ratepayers. Finally, legislators can pass the AACE Act to improve energy affordability across Maryland while building out battery storage and renewable energy. If the General Assembly wants to take concrete steps to improve the economic lives of Marylanders, the Legislature should enact these three bills.