- The Washington Times - Wednesday, March 28, 2012

ANNAPOLIS — The Maryland Senate killed a bill Wednesday that would have allowed gas-utility companies to hit consumers with as much as a $2 monthly surcharge to pay for pipeline and infrastructure improvements.

The bipartisan measure was voted down 24-22, falling two votes short of passage after two days of debate in the 47-member chamber.

Opponents argued the bill would open the floodgates for providers wanting to raise prices and would further handicap residents facing a shaky economy and several tax and fee increases in this year’s General Assembly.

Gas companies would “know they’re going to get this money upfront and that they can spend whatever they want,” said Sen. Richard S. Madaleno Jr., Montgomery Democrat. “This is exactly what we complain about a bureaucracy doing. A bureaucracy is inefficient and doesn’t have the incentive to save money.”

Sponsors said the bill would have merely set restrictions on possible surcharges and given utility companies an incentive to repair aging and potentially dangerous gas pipelines by letting them raise extra funds during projects rather than the traditional method of requesting funds in the form of rate increases after completion.

Energy companies are allowed to raise rates or enact surcharges if they first receive permission from the state’s Public Service Commission (PSC).

Supporters also argued the bill could have actually saved money for utilities and ratepayers in the long run.

The end vote was somewhat surprising after the measure passed the House last week by a 111-15 vote.

Most senators acknowledged that infrastructure improvements can lead to higher energy bills, but split into two competing, nonpartisan factions on the issue of whether it’s better to impose such increases before or after the work is done.

Supporters argued an upfront surcharge would provide a more enticing funding method for utilities that are reluctant to take the risk of financing their own work and later asking the PSC for reimbursement in the form of rate increases.

They also contended the reduced upfront risk would help gas companies get better financing rates on projects and potentially pass the savings onto consumers.

“This is not a scheme to take money from ratepayers,” said Sen. Allan H. Kittleman, Howard Republican. “It’s just a pay-go mechanism to allow them to be billed and pay for it as it’s being built. I think it’s more efficient.”

Sen. John C. Astle, the bill’s lead sponsor, stressed that the PSC would have maintained oversight over any surcharge agreement and could have demanded repayment to consumers if companies were found to misuse funds.

Mr. Astle, Anne Arundel Democrat, added that the mechanism could have encouraged many providers to fix problems that have hurt efficiency and put the public in danger.

“Our whole infrastructure is really aging and starting to come apart,” he said. “The problem with the gas infrastructure is that it really presents a hazard because gas explodes.”

Opponents raised concerns that the maximum $2 surcharge would be applied evenly to residential and commercial ratepayers regardless of consumption or current gas bills.

They argued the bill would have essentially written a pre-project blank check to gas companies seeking to avoid the accountability associated with proving after the fact that their completed work justifies a future rate increase.

Several lawmakers argued the bill was being pushed by gas companies after the PSC rejected the Washington Gas Light Co.’s request last year for a $30 million rate hike to fund improvements.

“You want to build a project? Go out, get it financed, run it through the Public Service Commission and get your return,” said Senate Minority Leader E.J. Pipkin, Cecil Republican. “At the end of the day, I see this as a bailout bill: moving cash flow forward for a company to build infrastructure.”



Click to Read More

Click to Hide