Bal­ti­more, BGE reach set­tle­ment over use of city con­duit sys­tem

Baltimore Sun - - MARYLAND - By Yvonne Wenger ywenger@balt­sun.com twit­ter.com/yvon­newenger

Bal­ti­more of­fi­cials are poised to set­tle a law­suit with Bal­ti­more Gas and Elec­tric Co. over how much the util­ity must pay to use the city’s cen­tury-old con­duit sys­tem.

The sides have bat­tled over the is­sue since the city spend­ing board voted more than a year ago to more than triple the fees com­pa­nies pay to use the un­der­ground net­work.

Few de­tails were pro­vided Mon­day, and nei­ther the city nor BGE im­me­di­ately pro­vided a copy of the set­tle­ment agree­ment.

The Board of Es­ti­mates is ex­pected to ap­prove the agree­ment Wed­nes­day. Of­fi­cials did not say whether city res­i­dents would face a rate in­crease or sur­charge.

Ac­cord­ing to the board agenda, the sides have reached “an agreed-upon con­duit rental fee rate.” The set­tle­ment sets the rate through 2022.

The terra cotta con­duit sys­tem, which dates to 1898, con­tains elec­tric, tele­phone and fiber-op­tic ca­bles. Com­pa­nies that use the sys­tem pay the city semi­an­nual fees.

BGE, which has rented space in the con­duit sys­tem for more than 100 years, is its largest user, ac­count­ing for more than 75 per­cent of the ca­pac­ity.

The util­ity and a group of telecom­mu­ni­ca­tion providers sued the city over the rate in­crease.

The new rate was ex­pected to cost BGE about $30 mil­lion. The util­ity sought to off­set the cost by charg­ing Bal­ti­more res­i­dents about $8 more per month. It es­ti­mated it would charge busi­nesses be­tween $15 and $3,350 more.

The util­ity said the city’s de­ci­sion to raise rates had the po­ten­tial to af­fect cus­tomers in eight Mary­land coun­ties.

A BGE spokesman said the agree­ment does not pro­pose a sur­charge for city res­i­dents. The spokesman, Aaron D. Koos, said it was pre­ma­ture to dis­cuss the spe­cific terms.

“We are hope­ful that it will en­able us to con­tinue our part­ner­ship with the City in im­prov­ing this im­por­tant piece of in­fra­struc­ture,” Koos said in a state­ment. “We worked closely with the City to iden­tify a rate struc­ture that saves cus­tomers a sig­nif­i­cant amount of money and still pro­vides the City with the rev­enue needed to mod­ern­ize the con­duit sys­tem.”

It is un­clear what cost sav­ings the agree­ment might yield.

The Board of Es­ti­mates agenda con­tained few de­tails about the agree­ment.

“BGE and the City have con­tin­ued their ef­forts to reach an am­i­ca­ble res­o­lu­tion re­gard­ing BGE’s oc­cu­pancy of the City’s con­duit sys­tem,” of­fi­cials wrote in the doc­u­ment. “The Set­tle­ment Agree­ment cur­rently be­fore the Board for ap­proval pro­vides cer­tainty in the rates the City is en­ti­tled to charge BGE. … It fur­ther re­duces the risk of BGE re­lit­i­gat­ing is­sues re­lated to the City’s con­duit lease rate for the fore­see­able fu­ture.”

The Mary­land Pub­lic Ser­vice Com­mis­sion, which reg­u­lates util­i­ties, de­clined to com­ment Mon­day. A spokes­woman said the com­mis­sion had not seen the terms of the agree­ment.

The city’s spend­ing board agreed in Septem­ber 2015 to charge com­pa­nies $3.33 a foot per year to use the con­duit sys­tem, up from the old rate of 98 cents a foot per year.

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