The Maryland Office of People’s Counsel (OPC) reports that most Maryland utility customers would notice temporary increases on their bills for utility-run energy initiatives.
The hike will occur when the state moves to a new cost recovery method, which will ultimately save customers tens of millions of dollars, according to the OPC.
The adjustments are the outcome of the Public Service Commission’s decisions regarding EmPOWER, the State program to promote energy efficiency and reduce greenhouse gas emissions that is supported by 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,” People’s Counsel David Lapp stated. “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 started in 2008, when the EmPOWER initiative was launched.
According to the OPC, the Public Service Commission ordered utilities to charge customers approximately 20% of EmPOWER program costs each year in order to reduce the initial cost burden.
The remaining about 80% of each year’s program expenditures were delayed to following years, with utilities earning a “return” on the unpaid balance, according to the OPC.
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This arrangement led in an unpaid amount of more than $800 million, according to OPC.
Customers’ returns on unpaid balances, which range from 9 to 10% depending on the utility, have boosted EmPOWER’s overall costs and account for a significant portion of what customers pay for EmPOWER each month, according to the OPC.
According to the OPC, increased surcharges will be used to reduce the outstanding balance.
EmPOWER surcharges are likely to be lower after 2026 than they would have been without the ruling, as customers will no longer pay the utility a “return” that includes the utility’s revenues, according to the OPC.
The General Assembly passed House Bill 864 to reduce the utilities’ returns on the EmPOWER balance, and hence utility surcharges, and to ensure that future EmPOWER payments are not deferred and paid with “interest.”
According to OPC, the measure also provides the Commission with more instruments for lowering surcharges.