By BONIFACE AKARAH

Maryland residential consumers could face more than $400 million in costs over 50 years under Baltimore Gas and Electric Company’s (BGE) arrangements for accessing Baltimore City’s underground conduit system, the state’s Office of People’s Counsel has warned.

In a statement issued on October 21, 2026, Maryland People’s Counsel David S. Lapp said the utility’s proposal to impose a surcharge on customers to recover conduit-related expenses raised concerns about how infrastructure costs should be shared among consumers.

Lapp said his office was still reviewing BGE’s filing but described the proposal to limit the costs to customers most closely associated with the infrastructure as a significant departure from existing cost-allocation practices.

“Utilities routinely incur costs to benefit discrete customers but not others,” he said, citing expenses associated with constructing and maintaining utility poles, wires and substations, as well as securing rights-of-way.

He added that allocating costs only to customers closely associated with the Baltimore City conduit system “must be carefully evaluated.”

The dispute centres on a 2023 agreement between BGE and Baltimore City, which Lapp said committed customers to 50 years of cost recovery while guaranteeing the utility only three years of access to the underground conduit.

According to the People’s Counsel, customers could end up paying for BGE’s capital improvements to the city-owned infrastructure, including returns to investors, while also funding a new lease agreement that would allow the utility to continue using the conduit.

Lapp said the arrangement raised questions about the prudence of BGE’s 2023 decision, which replaced lease payments with capital spending on the conduit system.

Although BGE filed the proposed surcharge separately from its current rate case, he argued that the request was directly relevant to the Public Service Commission’s assessment of the earlier decision.

“At issue in the case is $80.5 million of a total of about $120 million in capital spending,” Lapp said, adding that customers could pay that amount and substantially more to cover the utility’s return, including profits, if the commission approves the expenditure.

He also warned that spreading the costs over a longer period could reduce the immediate monthly impact on bills while significantly increasing the total amount paid by consumers.

In an analysis completed in 2023, the Office of People’s Counsel estimated that the original arrangement, which contemplated up to six years of capital expenditure totalling $212 million, could cost customers about $860 million over 50 years.

With capital spending of approximately $120 million between 2023 and 2026, rather than the initially projected $212 million over six years, the office estimates the total 50-year cost to customers will exceed $400 million.

Lapp said BGE’s 2023 decision could leave future customers paying for two arrangements simultaneously: the capital improvements and associated returns, as well as a new lease agreement beginning in 2027.

He said these costs had not been evaluated when BGE sought regulatory approval for the earlier deal as part of its previous multiyear rate plan.

The People's Counsel also questioned the timing of BGE’s surcharge filing, saying the utility could negotiate new rates with Baltimore City, as it had done previously.

According to Lapp, BGE’s filing referred to the city’s announcement of a newly approved charge, but it remained unclear whether the utility had negotiated the terms or entered into a new lease agreement before seeking to recover the costs from customers.

He said BGE could seek recovery in a future rate case if it executed a new agreement and demonstrated that the costs had been incurred or constituted known and measurable future expenses.

The Maryland Office of People’s Counsel is an independent state agency that represents residential consumers in electricity, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.