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BGE bills will begin increasing
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Related Topics: BALTIMORE
BALTIMORE (Map, News) - Customers of Baltimore Gas & Electric Co. will see their power bills creep up in the spring once the utility giant floats bonds to pay for the electricity it has been sending into homes.
“All the costs we are incurring to go out and get the power we are deferring,” said Mark Case, BGE’s vice president of regulatory affairs
The power company, a division of Constellation Energy, will sell about $630 million in bonds to pay for the power that the company is selling below market value as part of its rate-stabilization plan.
Customers will be charged about $5 a month for the next 10 years to repay the bonds, but the actual amount will be based on the amount of power used, Case said.
The need for the loan came after the state moved to stave off a 72 percent rate increase this past year. The state and the power giant agreed to a 15 percent rate hike with customers paying back the deferred amount plus interest.
While the state’s Public Service Commission said customers would begin to pay the money this month, Case said BGE will wait until after its bonds are sold before collecting the money. That should be sometime in March, he said.
By selling the bonds with a Triple A rating, BGE can secure a lower interest rate than on the open financial market. It’s a move Case said will save $140 million.
But while BGE customers will be paying more, they also will be earning more interest on the money the power company holds as a deposit.
The PSC last month raised the interest rate from 4.1 percent annually to 5 percent, the commission said in a statement.
Case said BGE typically requires deposits in the amount of two months of utility service and holds the deposits for a year. Customers are then refunded the deposit, plus interest earned, after about a year.
Comments from Examiner Readers
8:45 AM MST on Sat., Apr. 21, 2007 re: "Co-op laws decried as prohibitive"
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Examiner Reader said:
So where are we with this effort? I assume it's dead or we would have heard more about it since December. It would aos be nice if reported would spell out approximately what BG&E's new proposed "price to compare" would be if nothing is done. They all say 50% increase, so to me that says to me: $0.113 x 1.5 = $.1695 (or there about) I'm glad I switched to WGES and got $0.089. I recently got a letter from them telling me I'll need to moving into a 1 or 2 year fixed contract soon. New rates for me are: $0.109 and $0.11 for 1 and 2 year contracts respectively. Note the site currently has offerings of $0.113 (for 5% wind power). The only thing close is Commerce at $0.092 and $0.098 variable rates. Pepco has a nice $0.127 100% green option so I could be saving the world. It's only appealing if the BG&E rates go up to what I calculated above (not including deferral interest). Feel free to chime in any time.
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