Legal Bulletins

Bottom Line

On October 1, 2026, the Maryland Public Service Commission ended the multi-year rate plan (“MRP”) pilot under which BGE has set its gas and electric distribution rates since 2021. The Commission found that the pilot largely failed to deliver its promised benefits to customers. As a result, BGE’s next gas rate case will very likely be a traditional historic test year case, which generally gives customers stronger protection against forecast-driven increases. The Commission, however, has not closed the door on MRPs permanently. A Commission work group will recommend over the next nine months whether, and in what form, forward-looking ratemaking should return. That process presents both a risk and an opportunity for large gas customers.

What the Commission Decided

The pilot fell short

The Commission found that the MRP’s goals were “largely unachieved.” BGE recovered its costs faster, but the Commission could not identify a corresponding benefit to ratepayers. It found no meaningful gains in transparency, rate predictability, innovation, or progress on State energy policy, and it concluded that the MRP process was more burdensome to review than a traditional rate case.

BGE bears the burden of proving its costs

The Commission agreed that the MRP reconciliation process had effectively shifted to other parties the burden of showing that BGE’s spending was imprudent. It reaffirmed that the utility must affirmatively demonstrate that the costs it seeks to recover were prudently incurred. The Commission also criticized BGE for providing too little information in its initial filings, noting that more than 2,000 data requests per case reflected a failure of transparency rather than healthy engagement. 

New statutes reshape any future multi-year plan

Under the Next Generation Energy Act (2025) and the Utility RELIEF Act (2026), any future MRP must demonstrate customer benefits and may not include reconciliations or cost-sharing that charge customers more than the approved revenue requirement. The Commission may, however, require reconciliations that refund over-collections to customers. The RELIEF Act also temporarily bars forecasted test years.

Key questions remain open

The Commission identified several unresolved issues, including how “customer benefits” should be defined and proven, whether earnings-sharing mechanisms are lawful, how prudence reviews should work without reconciliation, and whether the Bill Stabilization Adjustment should continue.

What Happens Next

BGE’s pending electric case, filed July 2, 2026, already uses a historic test year because of the RELIEF Act moratorium, and we expect any near-term gas filing to follow the same approach.

Why This Matters for Gas Customers

The record in this proceeding is notably critical of BGE’s gas spending. Parties pointed to a reported 43 percent increase in BGE gas delivery rates since the pilot began, gas capital spending approximately $123 million above the approved budget in BGE’s first MRP, and a first-year residential gas increase of roughly $10.43 per month in BGE’s second MRP. These findings, together with the Commission’s emphasis on utility accountability, give gas customers a strong foundation from which to challenge BGE’s next request.

We also expect BGE to seek the same types of relief in its gas case that it is seeking in its electric case, including recovery of costs excluded from prior reconciliations, a new storm-cost rider with annual true-ups, and additional regulatory assets. Each of these items warrants close scrutiny.

Recommended Next Steps

1. Continue to monitor for BGE’s gas filing and be prepared to intervene promptly. Early intervention preserves full discovery rights and the ability to shape the procedural schedule.
2. Participate in PC 83 before February 1, 2027. The work group’s recommendations will largely determine whether forecasted test years and MRPs return. Comments or direct participation would give large gas customers a voice in that outcome.
3. Track the 2027 legislative session. The Commission’s April 1, 2027 recommendation may lead to further legislation affecting how utility rates are set.
4. Build case strategy around the Commission’s findings. Key themes include BGE’s burden of proof, the expectation of full upfront disclosure, the need for any return on equity to reflect reduced regulatory risk, and the open questions surrounding the Bill Stabilization Adjustment and earnings-sharing.
5. Coordinate with aligned parties. The Office of People’s Counsel and other customer groups advocated ending the MRP and returning to historic test year ratemaking and may be natural allies.
6. Follow the pending refund dispute. The Office of People’s Counsel contends that BGE over-collected approximately $28 million in 2025 and should refund it. BGE and Commission Staff take the position that current law does not permit such a refund. The Commission has not yet ruled.

Conclusion

Order No. 92666 is a favorable development for customers concerned about BGE’s gas rates. It returns ratemaking to a framework that places the burden squarely on BGE and signals the Commission’s skepticism toward forecast-based increases. The coming months, however, will determine whether a reformed MRP returns. We recommend that the client remain actively engaged both in BGE’s next gas case and in the PC 83 process. We would be glad to discuss these recommendations at your convenience.

Roberta "Bobbie" R. James 
410-576-4170 • rjames@gfrlaw.com