On July 30, Exelon, the owner of Maryland’s two largest utilities, Baltimore Gas and Electric (BGE) and Pepco, announced its second-quarter earnings via a call with investors and a press release to the business press. CEO Calvin Butler promised investors that the company was “delivering where it matters most” and remained “on track to deliver on our financial commitments.” The company was proud of its results and not shy about sharing the news.
But when it came to BGE’s $156.1 million rate increase, the company wasn’t anywhere near as loud. Instead, they quietly released the news on July 2, mere hours before journalists, and more importantly, families, began their long July 4th weekends. The juxtaposition between these two announcements should tell my fellow Marylanders everything they need to know about who Exelon values.
The July 2 rate increase joins a $120 million rate increase that Pepco is seeking. For Exelon executives and shareholders, BGE’s and Pepco’s requests aren’t about delivering for customers. They’re just an opportunity to earn a guaranteed return for investors on the backs of ratepayers.
Marylanders should pay close attention to another major theme from Exelon’s earnings call: Exelon’s push for utilities to own more power generation and storage on the grid, not just the poles and wires that deliver electricity. Executives spent much of the call repeatedly arguing that utility-owned power generation should play a larger role in addressing the supply challenges facing the PJM regional grid.
But “utility-owned generation” is not simply a technical policy choice, and Marylanders should understand what it means before it becomes the default answer. When a regulated utility like BGE or Pepco builds and owns a battery storage project instead of buying capacity on the open market, it doesn’t just add electricity supply. It adds an asset to the utility’s rate base, on which the company and Exelon earn a guaranteed return; the same 10%-plus returns at the center of BGE’s and Pepco’s current rate cases.
Exelon is already pursuing exactly this strategy in Maryland. BGE and Pepco have both submitted battery storage projects as part of the state’s distribution-connected storage solicitation, on top of a similar 500-megawatt project Exelon’s Atlantic City Electric subsidiary is pursuing in New Jersey. The company frames these projects as “practical solutions” for reliability and affordability. It is also a plan for Exelon to grow the asset base it earns a return on, funded by the same customers footing the bill for BGE’s rate case.
None of this means BGE’s grid doesn’t need investment or that battery storage has no role to play in solving Maryland’s energy supply problem. But there’s a real difference between a utility building what the grid actually needs at the lowest cost to customers and a utility building what maximizes its own profits while telling investors that it’s all part of what management calls the “Exelon Promise.” Maryland regulators reviewing BGE’s and Pepco’s rate cases, and any future storage or generation proposals that come with them, should ask the same question Exelon’s own earnings call answered for its shareholders: Who is this actually good news for?
