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BGE Files Multiyear Customer Relief and Energy Infrastructure Investment Plan

May 27, 2020
Plan to aid in Maryland's recovery from the pandemic, continue improvements to electric and natural gas systems.

Baltimore Gas and Electric Co. (BGE) filed a multiyear customer relief and energy infrastructure investment plan with the Maryland Public Service Commission (PSC). The plan is designed to aid in the region's recovery from the pandemic and to continue improvements to the electric and natural gas systems serving 1.3 million electric customers and more than 680,000 natural gas customers in central Maryland.

Covering the years 2021 through 2023, the plan details how the BGE will invest US$5 billion in the electric grid and natural gas system. The Economic Alliance of Greater Baltimore calculates that these investments will have an economic impact of US$15 billion, supporting more than 26,000 jobs.

As part of the plan, the BGE will freeze customers' base delivery rates at current levels for the next two years. Beginning June 1, 2020, electric supply costs are dropping 2.8% for BGE standard offer service customers because of a reduction in wholesale energy costs. This results from a continuing trend of significant wholesale electricity cost declines over the last decade. The multiyear plan structure enables the BGE to spread costs of the investments across several years. To hold rates flat for the first two years of the plan as the region recovers, the utility is deferring rate adjustments and advancing to customers long-term tax benefits, which are normally realized over several decades, to offset rates by more than US$360 million.

After the two-year delivery bill freeze, the company is requesting an 8.3% upward adjustment of rates in 2023 to reflect the investments being made over the three years. Even with the proposed, requested adjustment three years from now, the average residential customer's total BGE bill is projected to be 22% lower than it was in 2008 because of lower electric supply costs and customers' use of less energy through more efficient appliances and energy-saving programs enabled by the smart grid. On average, BGE customers' total bills are among the lowest in the country as a percentage of median household income and substantially lower than the U.S. average.

Over the three-year plan, the BGE will continue its contributions to Maryland nonprofits, including emergency response organizations, those providing pandemic relief, and community cultural organizations. These contributions are made using shareholder dollars and are not reflected in customer bills.

The BGE also plans to expand the BGE Workforce Collaborative, an infrastructure academy the company has been piloting since 2019 that provides training and job placement services for local residents in energy and other skilled construction trades. Over the next three years, approximately 600 participants will be trained and assisted with job placement opportunities at companies that work with the BGE on infrastructure projects. Currently, five major BGE contracting companies participate in the Workforce Collaborative and the program is being offered to additional companies seeking qualified job candidates.

The BGE is making a US$1.5 million contribution using shareholder funds to the Fuel Fund of Maryland to assist limited income residential customers with their bills in 2020. This is in addition to the customer-funded US$2.6 million that is currently directed by the company for customer assistance through the Fuel Fund. To provide customers with payment flexibility, the BGE has extended its payment arrangement plans to allow customers to spread balance payments over 12 months or longer for qualifying customers.

In March, the BGE suspended service terminations for nonpayment and waived late payment fees. The suspension of service terminations and waiving of new late payment fees are now being extended to July 1, 2020, for all residential customers and qualifying businesses. The company has also reconnected customers whose service had been terminated prior to the suspension period to enable more residents to more easily comply with Maryland's stay-at-home order while it was in effect.

The BGE will also be providing US$1 million in funding to county-administered business pandemic relief funds in central Maryland to assist small businesses that have been challenged by the economic hardships of the COVID-19 response. In addition, beginning in 2021, the BGE will establish a small business relief grant program for businesses with less than 25 employees to receive grants up to US$20,000 each to help cover operating expenses. The utility is also evaluating ways to expand its Smart Energy for Economic Development (SEED) program that provides discounts to qualifying commercial customers who expand hiring.

All charitable contributions by BGE shareholders are in addition to the more than US$1 million already provided in March and April 2020 by the BGE, Constellation, and Exelon to benefit relief organizations including United Way of Central Maryland, Baltimore Community Foundation, and the Maryland Food Bank.

Last year, the BGE spent US$440 million with Maryland businesses, of which US$217 million was with diverse businesses in the state. The company's energy infrastructure investment plan includes more than 300 projects and maintenance programs for the period 2021 to 2023. Examples include:

  • Enhancing energy infrastructure supporting the growth of important economic development sites, such as the continued grid enhancements to the Tradepoint Atlantic Redevelopment site.
  • Installing smart automation equipment to more quickly identify and circumvent damage to the electric grid, and reduce the frequency and duration of power outages.
  • Replacing outmoded technologies, such as limited capacity 4-kV electric systems, to improve reliability, enable greater adoption of solar energy and electric vehicle (EV) charging, and to increase capacity in areas where redevelopment adds additional customer demand.
  • Preparing the grid for extreme weather with continued tree trimming and vegetation management to ensure power line clearance and improve reliability during extreme weather events.
  • Replacing outmoded natural gas pipeline segments using modern technologies and installing over-pressurization protection equipment to improve safety and reliability.

Customers are benefiting from infrastructure investments by the BGE over the past decade. Power outages have declined by more than 38% and when customers do experience a service interruption, their power is restored nearly 40% faster today. Hundreds of miles of natural gas pipes are being replaced at an accelerated pace, resulting in a safer, more efficient gas system that is expected to reduce annual greenhouse gas emissions in central Maryland. Gas pipeline upgrades completed during the plan years alone may reduce carbon emissions over their lifetime by nearly 1.1 million metric tons — equivalent to taking 247,000 gasoline-powered cars off Maryland roads for one year.

The BGE's plan is being filed under the PSC's multiyear plan pilot announced in February 2020. Utility multiyear plans provide the PSC with planned utility investments in advance for review and approval. The multiyear plan model is used in a number of states nationwide and is a new format for Maryland where regulators previously allowed utilities to seek recovery of investments only after those investments were made. The forward-looking multiyear plan structure is particularly valuable at this time because it provides certainty about rates and economic stimulus that gives customers and local communities the ability to understand future utility costs as recovery plans are made.

"We appreciate the challenges that our customers and our community are facing. This is an opportunity to help our customers and provide a lift to the Maryland economy when it is needed most," said Carim Khouzami, CEO of the BGE. "Prior to the pandemic, we had been designing a forward-looking energy infrastructure investment plan as part of the state's multiyear plan pilot. In light of the economic challenges created by the pandemic, we have been able to structure the plan to provide both near-term relief for customers and longer-term stimulus for the Maryland economy. The energy infrastructure investments we make translate into service benefits for our customers and communities and steady employment and financial assurance for the more than 900 supplier companies who provide equipment and services to the BGE. It is at times like this when the value of continued investments in the critical energy systems our customers depend on are most apparent, reliably powering homes, hospitals, first responders, and other essential services when energy is most crucial."

The multiyear plan review process is a public process led by the PSC, which ensures transparency, public input, and fair rates for all customers. A decision on the current proposed plan is expected from the PSC in December 2020.

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