March 28, 2012

Senate rejects monthly surcharge for some utility customers

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By Daniel Menefee
Dan@MarylandReporter.com

Sen. Jim Rosapepe

Sen. Jim Rosapepe

The Senate on Wednesday shot down a bill to compel the Public Service Commission to approve a $2 monthly surcharge for customers of Washington Gas Light that was rejected in November.

The bill was reconsidered Wednesday after it was voted down 22-23 Tuesday, picking up another no vote in the second tally.

“This imposes a fee on our constituents without Public Service Commission approval,” said Sen. James Rosapepe, D-Prince George’s. “It upends 100 years of utility regulation.”

The bill would have raised $150 million over five years for the utility to fund pipeline replacement and upgrades, but the measure was shot down by a narrow vote of 24-22, with no party line distinction.

In their request to collect the surcharge, Washington Gas Light told the PSC they could shoulder the costs of the upgrades on their own. The PSC denied the surcharge request but green-lighted the company’s plan to upgrade their pipelines.

Rosapepe also quoted the bill’s fiscal note, which says the surcharge “shifts the risk from the gas or electric companies to the ratepayers and decreases cost containment incentives.”

Sen. Brian Frosh, D-Montgomery, liked the bill even less than Rosapepe and said it made the General Assembly the “Court of Appeals” for the utility company.

Sen. Richard Madaleno, D- Montgomery, said the surcharge would create inefficiencies at the utility.

“They know they’re going to get this money upfront and they can spend whatever they want,” Madaleno said. “The current system works because there is a process, in which they are held accountable, and they will only get their money back if they do it in an efficient way for the ratepayers. Let’s not undo that [process] now.”

Sen. Jennie Forehand, D-Montgomery, said a vote to approve a surcharge would turn voters against the legislature and not the PSC.

“This is a legislative rate increase,” Forehand said. “I don’t know why we as a legislature want to raise people’s energy bills. The Public Service Commission is the mechanism [and] I hope this bill never sees the light of day.”

Sen. Nathaniel McFadden, D-Baltimore City, said the bill created great inequity because the same $2 surcharge would be applied to everyone.

“The price would be the same for a 75-year-old woman in East Baltimore as a major facility downtown like the Aquarium,” McFadden said.

Sen. Thomas Mac Middleton, D-Charles, a sponsor of the bill, said the language actually protects ratepayers.

Mitigating risk to Washington Gas Light would benefit consumers because utilities can leverage their surcharge revenue for better bond rates, he said. A five-year review of the Washington Gas Light surcharge would reveal savings that could then be refunded to customers.

“If there are those savings…then all those savings have to come back to the consumer,” Middleton said.  “[The bill] gives the protections to consumers that they don’t have now.”

He said the PSC currently has the power to approve a surcharge without legislative approval, but the bill mandates guidelines for the surcharge to protect the ratepayers.