Home | BaltimoreBrew.com

City triples the rate it charges BGE for use of municipal conduit system

Rate increase will bring up to $35 million in extra annual revenue, which the city says it will use to repair its aging conduit system

Above: The city’s three top elected officials, Comptroller Joan Pratt, Council President Jack Young and Mayor Stephanie Rawlings-Blake, approved today’s rate hike.

Portraying its vote as a populist measure, the Board of Estimates today more than tripled the fee that Baltimore Gas & Electric pays for use of the city’s underground conduit system.

Objecting to the increase as a “disguised tax” and “unfair to the citizens of Baltimore,” a BGE lawyer said the company plans to pass the increase along to electricity users.

The increase could amount to $8 a month for an average homeowner if approved by the Maryland Public Service Commission. BGE has not yet filed any rate increase with the PSC.

At issue is hundreds of miles of pipes and ducts buried beneath city streets and alleys that carry cables for electricity, fiber optics, telephone lines and  street and traffic lights.

Mostly constructed before and after World War I, the system is worn out and in need of repair, according to William Johnson, director of the Department of Transportation that is responsible for the system.

For the last 15 years, the city has threatened to increase the rate it charges BGE and about 50 smaller commercial users.

Today the spending panel did so, hiking the annual charge for access to the system from 98 cents a foot of power cable to $3.33 a foot.

In defending the increase, board member Bernard C. “Jack” Young got into a testy exchange with BGE’s lawyer, Kristen M. Eriksson.

Noting that BGE has asked for four rate increases since 2011, Young said, “The citizens of Baltimore have to pay that tariff. So you’re saying that we’re taxing the citizens? So is BG&E.”

When Eriksson said the PSC found the increases to be reasonable, Young cut her off. “We’re going to decide whether our rate increase is reasonable,” he said.

Mayor Stephanie Rawlings-Blake did not speak during the meeting, but had signaled earlier through her spokesmen that she supported the increase.

City: Funds to go for Improvements

Over the summer, BGE was in negotiations about the conduit fee with the mayor’s chief of staff, Kaliope Parthemos, and DOT director Johnson – at one point offering $100 million to buy the system from the city.

At the same time, DOT was reviewing data from other cities to determine what would be an equitable rate for users.

The $3.33 rate should produce about $50 million in annual revenues, up from the current revenue stream of about $15 million a year.

Johnson told the board today that his department will use the new revenues to proactively maintain 9-15% of the system a year, “lock and secure” the system, increase inspections and fix the thousands of street lights that flicker and fail because of aging infrastructure.

Most street lights are not properly tied into the conduits, Johnson said, and many conduits suffer from cracked or dirt-clogged vaults, manholes and pipes.

BGE: City Doesn’t Spend the Revenues

Eriksson objected to his assessment, saying that city records show that DOT collected $5.5 million more in conduit revenues than it spent on operating and repairing the system in 2013, the last year data was available.

Comcast joined in BGE’s protest before the spending panel.

John Conwell, vice president of government and regulatory affairs, described the new charges as a “rate shock” that Comcast and other users  were not prepared for.

“Rates should be cost justified, and we have not been provided any supporting documentation,” Conwell said, also arguing that the city had not given Comcast sufficient notice of its intentions.

Johnson said DOT gave conduit users advance notice of the proposed increase.

Glenn S. Middleton, director of Local 44 of AFSCME, praised the board for its action today, saying BGE has “ripped us off” long enough.

“I think it’s about time that you as leaders and we as the citizens and workers of this city start making sure these companies pay the fair share they should have been paying all along,” Middleton said.

Verizon also uses the conduit system, but is governed by a franchise agreement between the city and its predecessor company that was not impacted by today’s vote, Johnson said.

Today’s rate increase was scheduled to go into effect immediately, but was delayed until November 1 upon the recommendation of City Solicitor George Nilson.

Most Popular