Baltimore Gas and Electric Co. customers heated up about higher bills this winter can blame unusually cold weather for most the spike, the utility told state officials Thursday.
Though energy costs are slightly higher than last year, increased usage brought on by bitter cold temperatures is the biggest reason some ratepayers have seen their bills double in recent months, BGE representatives told the state’s Public Service Commission.
Rising anger over the increased bills could play a part in lawmakers’ renewed efforts to reregulate the state’s energy industry, folding on a decade-old bet that free market dynamics would result in lower utility rates.
January was 15 percent colder than normal and 22 percent colder than last year, said Wayne Harbaugh, BGE vice president for pricing and regulatory services. There have been twice as many hours with temperatures below 30 degrees Fahrenheit this year than last, he said.
“Bottom line, only a few things cause bills to go up,” Harbaugh said. “One is costs and we admit that they are up slightly. The other is that usage is up.”
Electric rates are up approximately 12.5 percent over last winter, and gas rates are up about 5 percent, Harbaugh said. With the colder temperatures, the average customer’s bill has gone up between 10 and 15 percent.
But many residents have seen their bills skyrocket far more than that, in some cases doubling. They haven’t been shy about giving both the utility and the PSC a piece of their mind; BGE said it has seen 14,000 complaints about high bills, up from 8,000 this time last year.
In response, the PSC held the day-long hearing, which packed the agency’s small conference room in downtown Baltimore and drew representatives from every major state utility and a variety of other state agencies and interest groups.
“You could go home by home, person by person and explain some of it,” PSC Chairman Douglas Nazarian said. “But with the number of [complaint] calls, something just didn’t add up.”
“This is not a call to the carpet,” Nazarian said. “This is a call to arms. We have to find out what’s happening.”
Harbaugh offered one possible explanation for those large increases seen by some customers: they may be using electrically-powered heat pumps. The pumps are most effective above 30 degrees, below which less energy efficient forms of heating may kick on.
Harbaugh also pointed to a longer billing period during November and December. Due to the season’s holidays, customers actual billing month may vary from 28 to 34 days and their energy usage in that period may be 10 percent to 15 percent higher than usual.
The utility urged customers facing problems paying their bill to reach out to them through their Web site, www.bge.com. BGE said it would also continue to educate customers about energy efficiency solutions.
However, Nazarian and other commissioners expressed frustration with BGE’s answers, and said it was an after-the-fact solution.
“What I come out of this hearing is, ‘it’s colder and people are using more and that’s just it,’” Nazarian said. “Everything you say makes sense as you say it but it doesn’t quite close the loop.”
Anger over the bigger BGE bills may give support to lawmakers’ efforts to reregulate the state’s energy industry, renewed in Annapolis this session.
In 1999, the state deregulated its energy market, believing that open market dynamics and competition between energy providers would spur the creation of new power plants and drive rates down. For the most part, neither has happened.
When the last rate caps came off and Maryland moved fully into the deregulated energy market in 2006, BGE rates soared 72 percent, provoking a firestorm around the region and leading some to mull re-regulation.
Last week, state lawmakers joined with consumer advocates to call for full re-regulation, which would require the state to buyback power plants and place them under the PSC’s oversight.
A bill sponsored by Sens. E.J. Pipkin (R-Upper Shore) and Jim Rosapepe (D-Prince George’s/Anne Arundel) and Delegates Michael Smigiel (R-Upper Shore) and Herman Taylor (D-Montgomery) would do just that. The legislation is backed by a study conducted by the non-profit Maryland Tax Education Foundation which found the state could repurchase the power plants and cut rates by 10 to 18 percent.
However, in a major report last fall, the PSC said full re-regulation would be too costly. Instead, the commission favored what it called “re-regulation lite,” a mix of energy efficiency and other programs which would lower demand for power.
Another moderate proposal, offered by Sen. Thomas Middleton (D-Charles) would require only new generation to be regulated, if the PSC determines that doing so would be in the best interest of ratepayers.