Maryland regulatory body addresses rate setting

The Maryland Public Service Commission (MPSC) has initiated the process of advancing its alternative utility rate-setting program known as a multi-year plan.

MPSC Chairman Jason Stanek said the action serves as a historic step to advance the state’s ratemaking.

“With this decision, electric and natural gas utilities will have a path to file for rates using a multi-year rate plan, with the option to incorporate a performance-based component in the near future,” Stanek said. “While alternative forms of regulation are not new in Maryland, we recognize that changes are rapidly occurring in the utility sector and more can be done to facilitate cost recovery, improve utility planning and meet the changing needs and expectations of customers. At the end of day, regardless of the form of ratemaking, the Commission’s responsibility is to ensure that utility rates remain just and reasonable.”

The process extends a utility’s approved rates several years into the future, officials said. The Commission’s use of the method is expected to limit the number and frequency of utility rate cases, allow customers to know with certainty the timing and scale of changes in rates and may also provide incentives to utilities if certain performance-based goals are achieved.

Benefits to a multi-year rate plan, per the Commission, include a shorter cost recovery period, providing more predictable rates for customers and more predictable revenues for utilities.