No $2 fee in pipe­line for Md. gas util­i­ties

Se­nate kills in­fra­struc­ture charge

The Washington Times Daily - - Metro - BY DAVID HILL

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.”


Mary­land state Sen. Richard S. Madaleno Jr., Mont­gomery Demo­crat, op­posed a monthly gas-util­ity sur­charge to pay up­front for in­fra­struc­ture im­prove­ments.


“Our whole in­fra­struc­ture is re­ally ag­ing and start­ing to come apart,” said Mary­land state Sen. John C. Astle, Anne Arun­del Demo­crat.

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