The Maryland Public Service Commission has approved an order aimed at reducing energy costs for customers. BGE will adjust the recovery of certain supply costs, spreading them across a six-month period. This will result in lower electricity supply charges during the winter and summer months, traditionally times of higher energy use. Conversely, customers will see a price increase during the fall and spring, when energy usage is typically lower.

The Commission’s objective is to “flatten costs” and lessen the impact of unusually high electricity bills during peak demand periods. This initiative initially surfaced in an April meeting, prompting the Commission to solicit proposals for cost distribution timelines ranging from four to twenty-four months.

Commission Chair Frederick Hoover emphasized that this action is a direct response to unexpectedly high energy costs and potential increased usage in the coming months, aiming to lessen the burden on customers.

BGE acknowledged the Commission’s decision, explaining that the adjustment involves shifting the recovery of supply costs stemming from last summer’s PJM Capacity Auction to months with lower energy usage over a six-month period. They committed to ongoing collaboration with the Commission and other parties to minimize the effects of rising energy costs for customers. Adjusted residential electric supply rates will be implemented starting June 1 for usage.

The Commission is also supporting a complaint filed against the Federal Energy Regulatory Commission, alongside the Maryland Office of People’s Counsel and several PJM state consumer advocates. The complaint challenges elevated wholesale capacity prices and argues that the recent PJM capacity auction imposes unfair charges on ratepayers.

BGE attributes the price increases to a surprising surge in capacity auction prices and the reliability-must-run (RMR) fee associated with Talen Energy. A capacity market auction is a competitive process where power companies offer to make their electricity generation available.

BGE Spokesperson Nick Alexopulos stated that customers are effectively subsidizing power plants that are scheduled to be decommissioned. This involves paying Talen Energy a fixed fee, known as the reliability-must-run fee.

The Talen Energy RMR fee refers to payments made to Talen Energy to keep its Brandon Shores and H.A. Wagner power plants operational in Maryland beyond their planned retirement dates. PJM Interconnection, the regional grid operator, pays $312 per megawatt per day for the Brandon Shores plant, totaling roughly $145 million annually, plus a $5 million performance incentive. The H.A. Wagner plant receives $137 per megawatt per day, amounting to approximately $35 million per year, along with a $2.5 million performance incentive.