Maryland Supreme Court will hear OPC’s appeal of $8 million rate increase

By The Office of People’s Counsel

The Maryland Supreme Court has agreed to hear the Office of People’s Counsel’s appeal of a 2021 Public Service Commission decision related to an $8 million rate increase for Washington Gas customers. OPC’s appeal argues that the Commission’s rate order failed to enforce a requirement for “merger savings” that were promised to Washington Gas customers as part of a 2018 ruling that approved Canadian-based AltaGas’s acquisition of Washington Gas.

“We are glad that the Supreme Court has agreed to evaluate the Commission’s decision denying Washington Gas’s promise of merger-related customer savings,” said People’s Counsel David S. Lapp. “This is an important decision to get correct for the benefit of Washington Gas customers and to send a signal that merger conditions must be enforced based on the terms of the order approving the merger.”

Under Maryland law, the Commission cannot approve the acquisition of a public utility unless it finds that customers will benefit from the acquisition. Since 2011, Maryland’s five largest public utilities have been acquired by large out-of-state utility holding companies, such as AltaGas, Exelon, and FirstEnergy. The Commission has imposed hundreds of conditions on utility mergers to make sure they benefit customers and are in the public interest.

OPC’s request for Supreme Court review pointed out that the Commission approved AltaGas’s acquisition of Washington Gas subject to a commitment to realize at least $4 million in customer savings as a result of sharing corporate functions with other AltaGas subsidiaries, creating economies of scale, and lowering corporate costs. Instead of reduced costs and customer savings, however, three years later the Commission approved a substantial increase in corporate costs of $7.8 million, or 30 percent over pre-merger costs. The Court will decide whether the Commission erred when it approved the utility’s requested increase.

“Utilities are captive customers of public utilities, and these acquisitions are not disciplined by a competitive market,” Lapp said. “It is critical that those conditions are vigorously enforced.”

When asked for comment, Washington Gas Director of Strategic Communications, Andre Francis, responded by saying that “Washington Gas  does not comment on pending litigation.”

The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.

This press release was issued by the Office of People’s Counsel.