The Maryland Public Service Commission ended a pilot program on Thursday that allowed electric utilities to use multiyear rate plans, concluding that the forward-looking ratemaking model failed to deliver clear benefits to customers.
Here is the math. Under the multiyear rate framework utilized since 2020, electric utilities projected future capital expenditures and raised consumer rates in advance. Regulators found that while companies recovered costs more rapidly and disclosed more data on planned construction, customer rates accelerated faster than during the prior six-year period without producing measurable advantages in financing costs or debt ratings.
Assessing the Regulatory Shift
- Pilot Termination: The Maryland Public Service Commission formally concluded the multiyear rate plan trial on Thursday, declaring the approach unsuccessful.
- Consumer Impact: Maryland’s People’s Counsel noted that customer rates climbed at a faster rate under the multiyear model than during the preceding six years.
- Next Steps: A working group must deliver recommendations for a possible “substantially reformed” multiyear rate plan procedure by June 30.
The Mechanics of Multiyear Rate Plans
Traditional ratemaking requires electric utilities to complete physical upgrades to the electric system first and secure regulatory approval afterward before billing customers. The multiyear rate plan pilot altered this sequence by allowing utilities—including Baltimore Gas and Electric—to forecast upcoming system expenditures and adjust consumer tariffs upfront.
Proponents initially argued the model would improve financial footing, spread rate adjustments evenly, and introduce transparency. But the five-member commission determined that utilities frequently altered project scopes after initial approval, undermining the value of preliminary regulatory reviews. Furthermore, watchdogs spent excessive administrative resources vetting expansive construction lists rather than containing costs.
| Ratemaking Model | Cost Recovery Timeline | Commission Finding |
|---|---|---|
| Traditional Ratemaking | Post-construction approval | Standard baseline for cost scrutiny |
| Multi-Year Rate Plans (MRP) | Pre-construction projected spending | Failed to produce measurable ratepayer benefits |
Legislative Intervention and Future Oversight
Lawmakers in the Maryland General Assembly have intervened repeatedly in the multiyear ratemaking debate. In 2025, lawmakers added criteria that utilities must meet in order to have their multiyear plans approved.
House Speaker Joseline Peña-Melnyk supported ending forecasted ratemaking altogether, and that provision passed the House of Delegates this year. But it faced opposition in the Senate, and she ultimately reached a compromise with Senate President Bill Ferguson establishing the pause on forecasted ratemaking. Meanwhile, People’s Counsel David Lapp argued that the commission’s order confirms the fundamental flaws of the approach.
Conversely, utility representatives maintained that forward-looking structures remain viable. Nick Alexopulos, a spokesman for Baltimore Gas & Electric, noted in a joint statement that the commission affirmed that forward-looking ratemaking does have a place in Maryland’s regulatory future, emphasizing ongoing support for customer value.
Path Forward for Maryland Grid Governance
The regulatory body has directed a working group to submit recommendations for a substantially reformed multiyear rate plan procedure by June 30.
Consumer advocacy organizations, including Maryland PIRG, continue to push for permanent termination, warning that profit guarantees put ratepayers at risk.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
