Consumers face excessive long

Maryland’s utility customer advocate criticized Baltimore Gas and Electric Co.’s installation of gas pressure regulators on thousands of Baltimore homes, saying the project will burden consumers with excessive long-term costs.

The Office of People’s Counsel said in an analysis released Wednesday that massive spending on gas infrastructure could lead to billions of dollars in “stranded costs.” Such cost are investments in infrastructure that will not be economically useful because of regulatory or market changes. The spending also runs counter to state climate goals, the review said.

“It is long past time to evaluate the need and desirability of spending hundreds of millions of dollars each year tearing up our streets to add and replace fossil gas infrastructure,” said David S. Lapp, the People’s Counsel, in an announcement of the study. “The spending on fossil fuel infrastructure represents a lost opportunity to help customers electrify their home energy use, save money, and help mitigate climate change.”

A growing number of Baltimore residents in historic urban neighborhoods have pushed back against a BGE upgrade project they say forces them to accept gas pressure regulators on their rowhouse facades or risk losing gas service. BGE is relocating interior regulators as part of a project to replace aging natural gas pipes and equipment throughout the Baltimore region.

Members of communities across the city, including Fells Point, Federal Hill and West Baltimore, filed a class action lawsuit June 23 aimed at stopping BGE from forcing residents to accept equipment they say is obtrusive and unsafe. A Baltimore judge ordered a halt to installations without consent until Sept. 5.

BGE said its work is being done for safety and reliability and has been reviewed by the Maryland Public Service Commission, which regulates the state’s utilities. It says outdoor regulators are needed to maintain a safe level of pressure between the gas system and customer homes and appliances.

Gas regulator installations are part of a long-term BGE project to replace all infrastructure that existed as of 2013. That year, state legislators passed the “STRIDE” law (Strategic Infrastructure Development and Enhancement), which allows utilities to recover costs more quickly than normal.

In BGE’s Operation Pipeline, part of STRIDE, the utility is replacing gas mains with new, higher pressure pipelines, including installing gas regulators on thousands of customer properties.

BGE will complete the STRIDE program around 2043, but customers will continue to pay through the end of the century at a total cost of $15 billion, the people’s counsel’s analysis found.

This year alone in the STRIDE program, BGE is expected to spend about $160 million. It will take customers between 40 and 70 years to pay that off and it will end up costing them $576 million in total, the analysis said.

The revenue required to cover BGE’s principal and interest costs on infrastructure helps to determine the rates and rate increases customers pay for delivery of gas.

Lapp argues customers could save billions of dollars if BGE curbs spending on upgrades over the next two decades and instead plans for a decline in gas services.

A BGE spokesperson said Wednesday that the company believes it can reach the state’s climate goals of net-zero carbon emissions by 2045 through an “integrated energy system” with both gas and electric delivery infrastructure.

“To this end, BGE is, among other investments, modernizing the gas system throughout our service area by replacing low-pressure gas infrastructure with a higher-pressure system that will provide more reliable and resilient natural gas service to residents,” said Nick Alexopolous, the spokesperson.

The Office of People’s Counsel’s analysis found that Operation Pipeline is inconsistent with the shift toward electric heat pumps and other electric technologies that have become more efficient and cost effective.

As customers move to newer technologies and as state and federal polices encourage electrification, gas sales are expected to drop substantially, leading to hikes in rates. Higher gas rates will lead more people to switch to electrification.

Lower income families that can’t afford to switch to electric home appliances could be hurt the most, the analysis found.

It cites a Maryland Department of Environment report in June that showed reaching the state’s climate goals will require a “reduction in economy-wide natural gas consumption” and that spending on natural gas infrastructure will delay the transition to clean energy.

The People’s Counsel based its analysis on BGE projected budgets, gas reports that came out last year, including “Maryland Gas Utility Spending: Projections and Analysis” and “Climate Policy for Maryland’s Gas Utilities: Financial Implications” (Nov. 2022), and a petition for gas planning filed in February with the Public Service Commission.