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Climate Policy for Maryland’s Gas Utilities: Financial Implications

This OPC report, prepared by the consulting firm Synapse Energy Economics, considers the financial impacts on gas utilities and customers of a gradual shift toward high levels of electrification. Customers already are switching to electricity from gas but the trend will accelerate as Maryland implements its greenhouse gas reduction goals. The report models the progress of Maryland’s electrification and projects greenhouse gas emissions and trends in gas consumption, space heating type and equipment sales. It then uses the projections to analyze the financial implications of Maryland’s climate goals for gas utilities in the State through 2050.

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Maryland Gas Utility Spending: Projections and Analysis

OPC’s report, prepared by the consulting firm DHInfrastructure, provides critical information on current and future spending to maintain and expand the gas delivery system—the pipes, concrete, computers, and other infrastructure that make up the local distribution system. It also provides important information about future gas bills in the absence of reversals in current practices. The data relied on is publicly available information from utility reports and regulatory filings. While actual utility rates depend on many decisions yet to be made, the report provides numerous data and general projections that reflect business continuing as usual, without significant deviations in State policy, customer behavior, or utility practices. Topics covered in the report include those below.

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Pay Close Attention to Your Natural Gas Bill and Your Usage This Winter

This winter, expect to see much higher natural gas prices in Maryland and across the nation, relative to prior recent winter periods. The current rates for the “commodity” portion of the bill—the price of the gas itself, excluding the utility’s cost for delivery—were almost twice as high as they were last winter and almost three times what they were the winter before that. These rates change from month to month, but they will probably stay high, and you should be prepared for very high heating bills this winter.

The Public Service Commission regulates how the utilities buy natural gas and the cost of gas delivery, but it does not regulate wholesale natural gas prices. The utilities pass through to us in our bills the wholesale gas commodity cost. While gas delivery rates generally are increasing as well, commodity prices, not delivery rates, are the primary reason for the recent and projected increases in natural gas prices.

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