Maryland's Rising Power Bills: A Closer Look at Transmission Costs and Corporate Priorities

Maryland residents facing escalating power bills this summer might be surprised to learn that the often-blamed competitive energy market is not the primary culprit. A study by the Electric Power Supply Association (EPSA) and Energy Tariff Experts, supported by Energy + Environmental Economics, found that power generation costs, which make up less than half of the average electric bill, have actually decreased by 20% over the past decade when adjusted for inflation. This challenges the common narrative that generation costs are to blame for rising bills.

The real issue, as highlighted by a study from the Maryland Office of the People’s Counsel (OPC), lies in the transmission and delivery costs. BG&E's monthly charges for delivering electricity have doubled since 2010, with an average annual increase of 5%, significantly outpacing the average inflation rate of 2.65% per year. In contrast, Potomac Edison, serving Western Maryland, raised its rates by only 2.1% annually over the same period.

BG&E attributes these higher costs to the price of reliability, but the underlying cause appears to be the financial commitments made by its parent company, Exelon, to its investors. Exelon has pledged to deliver annualized earnings growth of 5% to 7% through 2028, a strategy that prioritizes shareholder returns over ratepayer benefits. This is facilitated by a regulatory model that guarantees BG&E a profit of 9.5 cents for every dollar spent on the electric grid, regardless of the investment's necessity.

Questionable expenditures, such as a $130 million investment in a new substation for the stalled Baltimore Peninsula redevelopment and charging customers for a $17.5 million contract for a Ford F-150 truck, highlight a system that incentivizes spending without clear benefits to consumers. While BG&E has announced $15 million in temporary assistance for struggling families, this amount is less than 3% of its $527 million in profits for 2024, underscoring a significant disconnect between corporate profits and consumer relief.

This situation underscores the need for greater transparency and accountability from utilities to ensure investments are made in the public interest, not just to meet shareholder expectations. Without significant reforms, Maryland families will continue to face rising power bills with little relief in sight.