Utilities are building out network upgrades that may not be necessary and passing the costs on to consumers, writes Kate Norris Simms. Stock.adobe.com photo by bohbeh.
Every month, families across Maryland brace themselves for the familiar frustration of paying their electric and gas bills. Over the last few years, these bills have climbed significantly, often outpacing inflation. Meanwhile, utility companies have led consumers to believe their hard-earned money is needed to make the electric grid more reliable and robust.
But behind this rationale lies an unfortunate reality: Utility monopolies are exploiting a flawed system to fatten their profits, leaving families and small business owners to pick up the tab.
In a world where most companies strive to cut production costs to compete for customers, these monopolies operate under an opposite incentive. The more they spend on their electric and gas delivery infrastructure, the more they increase their profits. While a reliable grid is crucial, these companies have manipulated this necessity into a scheme that benefits their bottom line – and their investors – far more than it benefits the average utility consumer.
Across the nation, utility companies are exploiting their monopoly status to extract as much money as they can from customers. For instance, Chicago-based Exelon has pledged higher earnings in each of the coming years to its Wall Street investors. How do they plan to achieve this? By continually hiking rates and pouring billions into grid and infrastructure investments that may not even be necessary.
Even more egregious is what’s happening here in Maryland. A report this year from the Office of People’s Counsel (OPC) confirms that Marylanders’ utility bills have soared due to an increase in electricity and gas distribution costs, not a rise in the price of electricity or gas. As the head of the OPC observed, “The more utilities spend on capital infrastructure — such as substations, poles, and wires (electric utilities) or pipes (gas utilities) — the more they profit.”
Among the chief culprits are Exelon’s Maryland subsidiaries, Baltimore Gas & Electric (BG&E), Pepco and Delmarva Power. BG&E’s electric rates more than doubled from 2010 to 2024 while its gas delivery rates more than tripled in that time. BG&E’s new multiyear rate plan increases distribution rates by $408 million across its 1.3 million electric ratepayers and 700,000 gas customers. Exelon’s Pepco and Delmarva Power utilities’ rates also more than doubled their delivery rates over the same period.
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For Marylanders already struggling to make ends meet, these hikes are devastating. As utility companies continue to line their pockets, they display little regard for the financial pain they’re inflicting on working families. But for Exelon and its investors, the profits keep rolling in.
The underlying problem is that utility companies are guaranteed a return on their investments by state regulators. This means that the more they spend on infrastructure – whether it’s truly necessary or not – the more they can charge in delivery fees. Unlike the fluctuating cost of energy itself, these delivery fees are locked in, leading to ever-increasing bills for consumers. It’s a system that prioritizes corporate profits over public good, and it’s long past time for a change.
The consequences of these unchecked rate hikes are dire. A recent CNET survey found that four in five Americans are concerned about rising energy bills, and nearly a third will borrow or rely on payment plans to cover the costs. Worse yet, some are having to choose between paying for basic necessities like food or medicine and covering their utility bills. Sadly, low-income households bear the brunt of these higher energy costs, widening economic inequities and increasing inflationary concerns.
It’s time for consumers to demand greater transparency and accountability from energy companies.
Utility companies like Exelon can start by opening their books and justifying every dollar they spend. Regulators like the Maryland Public Service Commission must push back at every opportunity against these rate increases, especially the multiyear plans recently sought by BG&E and other Exelon utilities and scrutinize every one of the company’s infrastructure projects to determine if it’s really necessary or not. We also need lawmakers in Annapolis to step up on behalf of consumers and taxpayers who are funding utility companies’ lavish investments.
If utility monopolies want to avoid accusations of “gold-plating” their systems – spending unnecessarily on enhancing their grids to inflate their profits – they need to work first and foremost in the interest of the families and small businesses they serve, and not just their shareholders. We have every right to know where our money is going and whether these investments are truly needed.