Posted on 04/11/24
| News Source: FOX45
Baltimore, MD - Apr. 11, 2024 - Most Maryland utility customers will temporarily see increased charges on their bills for utility-run energy programs, according to the Maryland Office of People’s Counsel (OPC).
The increase will happen as the State transitions to a new way of recovering costs that ultimately will save customers tens of millions of dollars, the OPC said.
The changes are the result of decisions by the Public Service Commission related to EmPOWER, the State program to promote energy efficiency and reduce greenhouse gas emissions that’s funded through utility rates.
“For years, customers have been paying too much for EmPOWER by paying outsized profits to the utilities—much like a credit card company profits from consumers that carry credit card balances,” said People’s Counsel David Lapp. “It’s an unsound financial practice to pay a regular expense—like your groceries—on a credit card and let the balance grow. Unfortunately, under past Public Service Commission orders, that’s what utility customers have been doing.”
According to the OPC, the problem began in 2008 when the EmPOWER program was started.
To minimize the initial cost burden on customers, the Public Service Commission ordered utilities to charge about 20% of EmPOWER program costs each year to utility customers, according to the OPC.
The other approximately 80% of each year’s program costs were deferred to later years, and the utilities earned a “return” on the unpaid balance, the OPC said.
Over time, this arrangement resulted in an unpaid balance that grew to more than $800 million, according to OPC.
The return customers have been paying on the unpaid balance, about 9 to 10% depending on the utility, has increased EmPOWER’s overall costs and comprised a substantial part of what customers pay for EmPOWER each month, the OPC said.
The unpaid balance will be eliminated through higher surcharges, according to the OPC.
EmPOWER surcharges are expected to be lower after 2026 than they would have been without the decision since customers will no longer pay the utility a “return” that includes the utility’s profits, OPC said.
The General Assembly passed House Bill 864 to lower the utilities’ returns on the EmPOWER balance and therefore utility surcharges and ensure that future EmPOWER costs will not be deferred and paid with “interest.”
The bill also gives the Commission additional tools to lower surcharges, according to OPC.