BALTIMORE, Jan. 19 /PRNewswire-FirstCall/ -- Baltimore Gas and Electric (BGE) today announced that declining wholesale electricity and natural gas prices will reduce the amount of a pending 2007 residential electric rate increase.
"After an extended period of record prices in 2005-2006, today's preliminary projections of power costs from the Staff of the Maryland Public Service Commission (PSC) provide a welcome measure of relief for our residential electric customers," said Kenneth W. DeFontes Jr., president and chief executive officer of BGE. "The effects of the global energy crisis still linger, however, and after 13 years of reduced and capped rates, power prices will still rise to reflect today's market levels."
BGE is taking proactive steps to propose to the PSC a plan that would provide options for customers as they transition to market rates. A rate plan was mandated in Senate Bill 1 (SB1), the electric rate legislation adopted by the General Assembly in June 2006. The company will file next week with the PSC a proposal that would allow customers, at their option, to transition directly to market rates on June 1, 2007, or delay the move to full market rates until Jan. 1, 2008. Under this option, customers would pay approximately half of the increase June 1, 2007, and the remainder Jan. 1, 2008. The installments are expected to be approximately 20 percent each, depending on actual power costs.
"The recent downward trend in wholesale natural gas and electricity prices is encouraging news and means the electricity increase will be lower than anticipated last year," DeFontes said. "The additional good news is that electric bills are down 7 percent on average thus far this winter because of the mild weather, and the benefits are even greater for BGE's natural gas customers, with average bills down 20 percent, or approximately $150, over last winter.
"The experience of other utilities in the region strongly suggests that most of our customers will opt to pay the full 2007 increase and transition to market rates in a single step on June 1, but we recognize this may not be the best option for all," said DeFontes. "We will propose to the PSC a fair and equitable rate plan with either a direct transition to market rates or a two-step installment plan for those customers who need additional flexibility."
The precise amount of the 2007 residential electric rate increase will not be determined until BGE completes wholesale power auctions in mid-February and publishes retail rates in early March. The Staff of the PSC today projected an increase of approximately 47 percent. Even with a projected 2007 increase at that level, BGE's rates will remain on par with, or lower than, utilities across the Mid-Atlantic and Northeast, including other Maryland utilities such as Pepco.
"Our customers, and many like them across America, were subjected to a series of unprecedented events last year that led to dramatic increases in energy prices," said DeFontes. "The subsequent fallout harmed our company as well, and the deferral of the 2006 rate increase weakened the utility financially and led to a series of downgrades for BGE's credit rating.
"The start to this year is much more promising, and when BGE's rates adjust to market levels by June 1, 2007, they will be in line with, or lower than, those paid by utility customers across the Mid-Atlantic and Northeast," DeFontes said. "We think having a period of stability that includes establishment by the PSC of an acceptable rate plan will help with the restoration of our historically strong credit rating."
DeFontes added that BGE is working on several fronts to keep electricity prices down and identify new ways to help customers better manage rising energy costs. He pledged to keep customers updated about the pending increase and conservation measures through a series of advertisements and customer notifications.
"To help keep prices down, we are buying electricity as efficiently as possible, staggering our purchases over longer periods of time," DeFontes said. "We are also planning to introduce a number of energy-saving technologies and programs that will help drive costs and energy use down.
"Maryland law provides customers the option to shop for the lowest price from competitive retail providers and we strongly recommend they do so," he said. "Customers can shop and compare offers from various electricity suppliers and select the one that works best for their needs.
"Lastly, our customers can take advantage of our budget billing program to help spread out costs and can reduce energy usage by following a few simple conservation measures we outline on BGE.com," DeFontes said.
DeFontes also noted that low-income customers may contact the State of Maryland's Office of Home Energy Programs to avail themselves of a variety of energy assistance programs.
Baltimore Gas and Electric; Constellation Energy
