Those unsightly gas meters outside of Baltimore rowhouses – spawning complaints, service terminations, a lawsuit and even the arrest of three protesters – have gotten the public thinking harder about Maryland’s energy sources.
But while the aesthetic impact of these devices is easy to grasp, the environmental impacts of new gas infrastructure – and the financial benefits to Baltimore Gas & Electric – haven’t received enough attention.
BGE wants to raise delivery rates for their customers for each of the next three years. If approved, the rate hike will raise the average customer’s monthly winter gas bill from $124 in 2020 to $189 in 2026, an increase of 52%.
That’s according to the Office of the People’s Counsel, an independent state agency which advocates for utility customers, and points out that BGE’s rate plan is uniquely structured to incentivize the utility to “shoot for the moon with massive spending proposals.”
In 2020, BGE became the first Maryland utility to have a multi-year rate plan approved by the Public Service Commission (PSC). A key criticism of such plans is that they shift investment risks away from the utilities’ owners and onto ratepayers.
That’s why brakes need to be put on this plan by the PSC, which is charged with protecting ratepayers from the actions of profit-driven utilities that operate as state-sanctioned monopolies.
The uproar that erupted after the company began installing external gas regulators in historic Baltimore neighborhoods has woken up the public to the company’s huge ramp-up of gas distribution capital spending in recent years.
Such spending has doubled since 2010 and will continue to increase, BGE has told its investors.
Based on these projections, the office of People’s Counsel David S. Lapp has documented what could happen by 2050: BGE rates would increase by as much as eight times from 2021 levels.
CO2, Methane and Benzene
Overspending on gas infrastructure hurts not only our pocketbooks, but also the health of our families and the planet.
The drilling and extraction of gas from wells and its transportation in pipelines results in the leakage of methane, the primary component of natural gas.
Methane is a potent greenhouse gas that contributes to planet warming.
Burning gas emits carbon dioxide and pollutants that can cause or worsen respiratory illnesses.
Children living in homes where people cook meals with gas-powered appliances have a 42% greater chance of experiencing asthma symptoms.
As the parent of a three-year-old with asthma, I feel switching our household off gas as soon as possible is not a long-term goal, but an urgent necessity.
A new study from Stanford University has found that cooking with gas stoves can raise the indoor levels of benzene, a carcinogen, above those found in secondhand smoke. Gas infrastructure and appliances are also prone to leaks and explosions, endangering communities.
Baltimoreans are all too familiar with the potential consequences, such as the 2019 explosion on Labyrinth Road that leveled three rowhouses, killed two people and injured seven more. Or the explosion in Pigtown in November that left three critically injured.
That’s why Washington and many state governments are incentivizing electric appliances and electric home heating.
The 2022 Inflation Reduction Act channeled $4.5 billion to states to provide rebates for electric appliances.
Maryland’s Climate Solution Now Act directs the state to reduce global-warming emissions from buildings by shifting the use of fossil fuels for appliances and home heating towards electricity.
It’s safer, cheaper, healthier and the only way we’re going to meet the ambitious goal the state has set: to cut statewide greenhouse gas emissions by 60% of 2006 levels by 2031 and reach net-zero emissions by 2045.
For all these reasons, it’s time for gas utilities to slow their infrastructure investments and start planning for their retirement.
Safety needs? Or profit motive?
Unfortunately, BGE didn’t get the memo. Instead of scaling back on gas infrastructure spending, the company is ramping it up.
It’s not a surprise that gas companies are aggressively pursuing profits to benefit their investors. They see a grim financial future, with gas consumption declining over time, as consumers embrace electrification.
BGE is spending $1.2 million a day on new gas lines and equipment replacement projects that will go on for decades. Customers may be saddled with costs that won’t be fully paid off until year 2100, according to Lapp.
In a petition filed in February calling for gas companies to decrease spending, Lapp said that lower-income gas customers would be left to shoulder the cost of excessive improvements in gas infrastructure, as more affluent households electrify.
BGE says the infrastructure build-up is vital to deliver energy safely. Indeed, the failure of indoor regulators, while rare, can pose a higher risk than failures of outdoor regulators. Outdoor regulators also offer easier access during an emergency, the utility has argued.
But community members, and now the Baltimore City Circuit Court, are questioning BGE’s rationale. Amongst their concerns is that moving the regulators outside can open up new risks, like damage from vehicle crashes.
On Tuesday a judge put a temporary hold on the installation of the new meters, and the PSC has directed BGE to turn service back on for customers refusing the new equipment.
As city residents who recently sued the company note, BGE argued to state lawmakers in 2020 that exterior gas service regulators aren’t always appropriate “in densely populated areas such as Baltimore City” and asked for amendments to relax the requirement that they be installed.
So what’s really going on here?
Gas utilities have a legal obligation to make sure their infrastructure is safe. But does the company need to replace all of the regulators and other components across its entire system? Or could it act more strategically?
Step up, PSC
The PSC should direct BGE toward smarter investments.
The makeup of the agency has changed dramatically since the regulator project and the last rate proposal were approved, which gives hope that it can step up to the challenge.
The board should move away from multi-year rate making and start planning for a dimmer future for gas infrastructure as more buildings go electric.
While BGE should be allowed to make a reasonable profit, it should be based on the successful provision of safe, affordable and reliable utility service.
Over investment in new gas infrastructure may boost profits in the short run. But from a customer and global perspective, it’s downright reckless.
• Emily Scarr is the director of Maryland PIRG and co-author of a report on how to strengthen energy efficiency in Maryland. To reach her: firstname.lastname@example.org and Twitter @emilyscarr.