Maryland regulators reconsider rate surcharge during power outages

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Local,Maryland,Rachel Baye

Power company officials will be grilled by state regulators Monday over why residents have been charged for electricity not used during major blackouts.

Maryland residents pay a small surcharge authorized by law when electricity use falls short of expectations. But some customers, incensed by what they consider lackluster service, are protesting even a small charge accrued during a blackout.

The Bill Stabilization Adjustment, or BSA, authorizes the surcharge, which was originally intended to encourage electric companies to help consumers conserve energy. But in January, the Maryland Public Service Commission realized the surcharge removed the incentive to restore power quickly after an outage and stopped allowing utilities to collect after the first 24 hours of any power outage in which 10 percent or 100,000 customers -- whichever is less -- lose power.

The last such outage for Pepco was Sept. 8.

But when weeklong power outages followed the June 29 derecho, Maryland residents were outraged that they have to pay for electric service they didn't have, prompting the regulators to revisit the issue.

The BSA unfairly gives to Pepco a benefit not afforded most businesses, Rockville resident Abbe Milstein wrote on behalf of the group Powerupmontco.

"If a dentist could not see patients because his office had no power, he is unable to charge his customers because he could not provide his service without power," she wrote.

The PSC should adopt policies that encourage Pepco to improve its system and prevent the power from going out in the first place, Milstein said.

However, both Baltimore Gas and Electric Co. and Pepco justify the surcharge as a way to cover fixed costs.

"If ... for whatever reason -- snowstorm or whatever -- your trash is not picked up, you're not receiving a rebate for your trash not being picked up in a given week because the municipality still has fixed costs," said BGE spokesman Robert Gould.

The BSA also benefits the state and customers by encouraging energy efficiency, Pepco Assistant General Counsel Douglas Micheel wrote in a PSC filing.

But there are ways to encourage energy efficiency without reimbursing companies for outages, said state Sen. Brian Frosh, D-Montgomery. "If [the PSC] can't figure out how to do that really -- I better not finish that sentence."

rbaye@washingtonexaminer.com

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Rachel Baye

Staff Writer - Education
The Washington Examiner