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PSC wrestles with billing after power outages

Maryland regulators on Monday weighed the possibility of changing a policy that allows utilities to bill customers for lost revenue during the first 24 hours of a power outage.

Utilities in Maryland were once allowed to charge customers for distribution costs throughout long power outages, but the policy was changed in January to allow the charges only during the first 24 hours after major storms.

The amount charged over that period is relatively small, an average of about 49 cents a customer. However, customer anger after long power outages during June’s “derecho” storm has brought a renewed focus on the policy.

Kevin Hughes, a Maryland Public Service commissioner, underscored during a hearing that many of the hundreds of thousands of people who lost power had to absorb significant expenses on their own because of the outage. Hughes mentioned discarded food, lost wages from home businesses, hotel bills, generators and gas as examples.

“I think what we’ve heard from customers is that given all of these costs they have to pay, requiring them to also pay for these lost distribution revenues is like pouring salt in their wounds,” Hughes said.

Wayne Harbaugh, director of pricing and regulatory services for Baltimore Gas and Electric, said the company needs the money to help pay for extra costs incurred by a big storm. He also said utilities can’t make investments to improve reliability, if regulators continue to make changes to revenue streams.

“We agree with some of the proponents saying we want a more reliable system,” Harbaugh said. “We’re willing to put the money into it, but then you can’t be taking more and more revenue away from us every time there is an outage.”

Harbaugh also noted that he has worked for BGE for 42 years and never seen such a powerful storm sweep into Maryland with such little notice. He told the commission it was unrealistic to expect full power restoration within 24 hours of such a major storm without a major overhaul of the electricity distribution system. That, he said, would add big costs to utility bills.

Rob Gould, a spokesman for BGE, said the company did not collect about $1.3 million as a result of the change approved in January to the bill stabilization adjustment. He said BGE collected about $600,000 from the policy regarding the first 24 hours.

Stan Balis, a special counsel for Montgomery County who argued before the PSC to change the 24-hour policy, said while the amount paid by each customer might not be large, customers still were burdened by expenses incurred by long outages.

“The fact that it’s a small amount for the person giving it out doesn’t mean it’s not a large amount for the company that receives it,” Balis said. “But it isn’t even the number of dollars. It’s the idea that the customer has had tremendous damage that’s occurred.”

Doug Nazarian, the PSC chairman, said the panel would make a ruling as soon as possible.