Future of Gas Proceedings

Historically, Maryland gas utility customers have paid more for gas supply than for gas delivery. But starting around 2009, large new supplies of “fracked” gas drove gas commodity prices down. In 2013 Maryland enacted the Strategic Infrastructure Development and Enhancement (“STRIDE”) Act, which gave gas utilities new financial incentives to replace aging gas infrastructure. STRIDE sparked a utility spending spree that has made gas delivery costs more expensive than supply costs—even as commodity costs have begun to rise with increased exports of liquefied natural gas (“LNG”) to international markets. Under both STRIDE plans and non-STRIDE gas infrastructure spending, utilities continue to pursue aggressive gas infrastructure projects that drive up distribution costs.

The ongoing increases in infrastructure spending by Maryland’s gas utilities are problematic for two reasons. First, they are rapidly driving up customer bills – visit “STRIDE” and “Gas Spending and Analysis” for a more in-depth explanation. Second, the utilities are rebuilding their gas infrastructure for a long-term future without considering how Maryland’s reliance on natural gas will change in response to increasingly affordable and efficient electric appliances for cooking, water heating, and space heating and Maryland’s greenhouse gas reduction goals.

To address the second issue, OPC petitioned the Public Service Commission in February, 2023 to institute a process for long-term gas system planning. Relying on findings from the 2022 Gas Spending Report, OPC’s petition asks the Commission to address: “Who will pay—and how—for the massive current spending on gas infrastructure when gas consumption declines?” OPC’s petition makes the following points:

  • The Commission has authority to investigate and reform gas company planning, practices, and operations;
  • The Commission should take advantage of existing guidance and resources in deciding how to proceed with gas utility planning;
  • Certain gas company practices are inconsistent with customer interests, do not require significant investigation, and are ripe for action;
  • Comprehensive and proactive planning is necessary to ensure just and reasonable rates and that the services and operations of Maryland’s gas companies are consistent with the public interest;
  • Gas utilities’ rates of capital spending are inconsistent with projected decline in gas consumption;
  • The gas companies’ misaligned capital spending practices put customers at risk of significant price increases; and
  • Technology, market trends, and climate policy are rendering the gas distribution business a declining industry

The Commission subsequently opened a docket (Case No. 9707) to request public comments on the petition. The Commission held a public comment period in October 2023 and a two-day legislative-style hearing in July 2024 on the proceedings, but have yet to make a decision. To urge a Commission decision, OPC submitted follow up comments to the Commission on May 5th, 2025. The comments reiterate concerns first identified in the petition and draw attention to 2025 legislative actions meant to address utilities’ gas spending that has driven up customer bills. The original petition and follow up comments propose that the Commission establish both a priority track and a long-term transition track to help distinguish between decisions ripe for Commission action now and those requiring more extensive investigation and fact-finding. Regarding the priority track, OPC’s 2025 comments outline actions the Commission can take in the near-term to address the rising costs of gas spending. These action items include:

  • The Commission has authority to investigate and reform gas company planning, practices, and operations;

  • The Commission should take advantage of existing guidance and resources in deciding how to proceed with gas utility planning;

  • Directing the gas companies to demonstrate why gas line extension subsidies should not be immediately eliminated for new gas lines;

  • Initiating a comprehensive review of gas company communications that promote gas over electric and other technologies;

  • Ending gas company policies that make it harder for customers to electrify and disconnect from the gas system; and

  • Ruling on the viability and cost-effectiveness of “gas-as-backup” approaches to building decarbonization, including the use of natural gas alternatives like hydrogen.

Regarding the long-term transition track, OPC’s 2023 petition and 2025 comments recommend that the Commission conduct a proactive and comprehensive investigation that will lead to the adoption of regulations that will direct gas utilities to submit transition plans and will govern the Commission’s oversight of those plans. These near-term and long-term recommendations should provide the Commission with the tools it needs to guide the future of gas in Maryland.

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