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Environmentby Fern Shen12:39 pmDec 12, 20230

Gas pipe replacement contradicts Maryland climate goals, will cause “skyrocketing rates,” report says

Abell Foundation analysis says the state’s current gas policy will create “a completely unsustainable economic and social situation for all Marylanders”

Above: A gas turbine electrical power plant at dusk. (abell.org)

Maryland’s gas suppliers scored a big win in Annapolis in 2013, persuading state lawmakers to let them impose surcharges to fund a massive pipe replacement program that would prevent leaks and promote safety.

But after passage of a measure setting customers up for billions of dollars in future charges, it turns out that there is no evidence that the Strategic Infrastructure Development and Enhancement (STRIDE) Act did anything to improve safety.

“There were no fatalities due to material-related causes, including aging pipelines, between 2005 and 2022,” a new report released by the Abell Foundation says, concluding the system was safe both before and after the act was passed.

“The number of serious injuries and deaths from natural gas accidents related to other causes has actually gone up in Maryland since STRIDE – no deaths and four serious injuries in the nine years before STRIDE compared to nine deaths and 58 serious injuries in the nine years since.”

So says “The Trouble with STRIDE,” which comes to a harsh conclusion about the impact of the act just days before the Maryland Public Service Commission is set to rule on a multi-year rate increase proposed by Baltimore Gas & Electric (BGE).

The 2013 law locked Maryland into a “decades-long, state-sanctioned gas infrastructure spending spree” for BGE and other companies, according to the report written by Arjun Makhijani, president of the Institute for Energy and Environmental Research.

Investing heavily in gas infrastructure – at a time when government climate policies almost universally call for a shift to electricity – will have disastrous implications for customers, according to the 32-page analysis released yesterday.

“Continuing those investments at a time of declining gas use will cause skyrocketing rates by the mid-2030s, threatening the health, well-being, and security of tens of thousands (or more) of Maryland’s low- and moderate-income families,” the report predicted.

The law “contradicts Maryland’s legislatively mandated climate goals and threatens to saddle a dwindling number of ratepayers with billions in costs for decades to come, with the impacts likely disproportionately felt by those least able to afford them.”

Natural gas rate increases in Maryland with continued STRIDE investments. (abell.org)

Estimated residential rates for BGE, Washington Gas and Columbia Gas customers based on a range of impacts from STRIDE investments. (abell.org)

Another finding slams the 2023 proposal by BGE, Maryland’s largest gas company, to require customers who are seeking a heat-pump rebate to maintain natural gas heating as a backup.

Calling the rebate program “unsound technically and economically,” the report says it would “keep customers tied to the natural gas system and saddle residential consumers with high costs.”

Rate Increase Coming?

The report comes as the Public Service Commission is expected on Thursday to rule on a BGE rate request that proposes increases averaging 5% over the next three years.

Maryland’s ratepayer advocate, the Office of People’s Counsel (OPC), has denounced the utility’s request as “a shoot for the moon” proposal offering little accountability as to how the utility spends the money.

The Abell report also comes in the wake of controversy in Baltimore last summer as BGE began installing gas regulators on the outside of homes, prompting complaints that they were unsightly, unsafe and unnecessary.

“Get some backbone!” Residents call on city leaders to prohibit BGE external gas regulators (7/13/23)

Residents accuse CHAP of “deafening silence” on BGE gas regulator issue (7/12/23)

Yes, those BGE gas meters are ugly, but there’s other reasons to be skeptical (7/3/23)

BGE’s rate plan would lead to massive customer rate increases (6/20/23, Office of People’s Counsel)

A bigger issue, Makhijani says, is the disconnect between this gas infrastructure replacement and Maryland’s greenhouse gas emission reduction goals, which mandate a substantial transition away from the use of natural gas for heating, cooking and other purposes in residential and commercial buildings.

This includes a 2021 law requiring the PSC to take climate change into account in its decisions and the 2022 Climate Solutions Now Act, mandating a 60% reduction in greenhouse gas emissions by 2031 and net-zero emissions by 2045.

The average BGE gas bill will increase to about $2,100 a year by 2035 and $7,500 a year by 2050  – Abell Foundation Report.

Beyond the environmental cost of slowing the state’s progress toward meeting climate goals, the policy will impose steeply rising financial costs on gas customers, the report says.

Noting that the average BGE gas bill was about $950 in 2021, the report says this bill would increase to about $2,100 a year by 2035 and $7,500 a year by 2050 in the absence of countervailing actions.

“At the high end, the estimated natural gas bill in 2050 would be almost equal to half the federal poverty level for a family of three in 2021,” the report says.

“In other words, for tens of thousands of Maryland families with very low incomes, natural gas bills alone would equal or exceed their entire income. And electricity bills would be on top of that.”

The rising costs will spur “a mass exodus from the gas system for homeowners who could afford it,” the report says, while “renters, especially low- and moderate-income renters, would be left facing bills they could not afford because they would not be in a position to make the shift to electrification.”

Accountability Needed

The report points a finger at the Public Service Commission as well as as the legislature that approved the STRIDE Act.

The law allows the PSC to approve a gas surcharge if it determines the proposed costs are “reasonable and prudent” and “designed to improve public safety or infrastructure reliability,” but the terms, Makhijani writes, are ill-defined.

“To date, the Commission has not significantly altered or rescinded any gas utility plan it had approved under STRIDE,” the report notes, asking “Is everything to be ascribed to infrastructure reliability without any metrics?”

The analysis ends with a number of recommendations, including that the PSC should agree to the request by the OPC that it undertake a comprehensive examination on natural gas, focusing on achieving climate goals equitably and making sure the companies’ expenses made on the grounds of safety are actually reducing the risk of serious accidents.

It also says the STRIDE program as it stands “should be ended –  as should attempts to continue it by other means, as for instance in the ongoing BGE multi-year rate case.”

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