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Maryland Industrials Seek Refund of Charges Used to Mitigate Certain Type II SOS Prices in 2008
June 23, 2011
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RG Steel Sparrows Point, LLC and the Maryland Energy Group have petitioned the Maryland PSC to direct Baltimore Gas & Electric to immediately issue refunds to customers who paid higher distribution rates in 2008 in order to mitigate the Type II generation rates of certain commercial customers who were being transitioned to Type II SOS service from Type I service.
As only reported in Matters, the Commission, in May 2008, capped a generation rate increase for customers transitioning to Type II SOS from Type I SOS (under a prior order making the size uniform) at 15%, while financing the mitigation through a distribution surcharge on all non-residential customers (5/29/08). At BGE, the nonbypassable surcharge was $.00137 per kWh, which collected about $7.2 million from customers from June through August 2008.
In September 2010 (9/20), Maryland Court Of Special Appeals ruled the PSC's mitigation to be unlawful, stating that the just and reasonable standard of Section 4-101 of the Public Utility Companies Article, cited by the PSC in its action, was not applicable to SOS supply rates.
"The Opinion makes clear that the Commission was without authority to approve an increase in distribution rates to recover the commodity cost of [electricity] purchased to serve new Type II customers," the industrials said.
"[T]he appropriate action for the Commission to take on remand is to restore the overcharged customers to the position they would have occupied had the Commission not acted unlawfully, i.e., to require BGE to refund revenues associated with the improper rate increase."
The industrials are seeking refunds with interest.
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