Maryland's Public Service Commission has pulled the plug on the multi-year rate plan pilot program that let Baltimore Gas and Electric, Pepco, and Delmarva Power set rates using three-year spending forecasts instead of actual costs. The commission concluded the experiment simply did not deliver what it promised, finding the pilot failed to accomplish its intended goals for ratepayers.
The decision, issued Thursday in a 129-page order, formally sunsets the pilot established under Order No. 89482, according to WMAR 2 News Baltimore. The commission found that the pilot changes did not produce clear, measurable benefits for ratepayers, did not provide customers with more predictable rates, did not advance Maryland's energy-policy goals, and did not create more utility innovation, per the PSC's own statement. Commission Chair Kumar Barve said the pilot showed what worked, what did not, and what must change for forward-looking ratemaking to deliver value for Maryland customers, per the same account.
A Six-Year Experiment That Outlived Its Welcome
The pilot began in February 2020, when the Maryland Public Service Commission switched participating utilities away from traditional 12-month historic test years toward three-year spending forecasts. BGE became the first utility in the state to adopt the model, submitting its initial pilot application in May 2020 for rates covering 2021 through 2023, the commission's own order notes.
In practice, the forecast-based model produced shorter cost-recovery periods for utilities and gave regulators more visibility into proposed capital and operations spending. But those upsides came with a cost: multi-year rate plans increased rate-case complexity, increased administrative burdens, and frustrated regulatory oversight, according to the commission's findings outlined in the order.
Overbilling Fights Piled Up Before the Pilot's End
The friction wasn't theoretical. In December 2025, the PSC denied nearly half of BGE's $152.3 million final-year pilot reconciliation request, ultimately granting $77.2 million after determining the utility had significantly overspent its approved multi-year budget. That request drew roughly 7,000 customer opposition postcards before regulators ruled.
Pepco faced a similar reckoning in March 2026, when the commission slashed its multi-year rate plan true-up request from $30.6 million down to $13.36 million, citing concerns that large bill adjustments threatened residential affordability. The original ask was roughly double what Pepco had been approved to spend for that rate year.
Consumer advocates had been warning about this exact dynamic for years. In October 2024 testimony to the PSC, Maryland People's Counsel David Lapp argued that multi-year rate plans incentivized utilities to submit inflated project wish lists without cost-containment incentives, noting that BGE and Pepco had together requested over $268 million above their approved revenues through true-ups. Lapp has since praised the commission for ending the current pilot program, and the Office of People's Counsel said it agreed with the decision. Customers, Lapp has argued, paid more under multi-year rate plans than they would have under standard ratemaking based on actual costs.
Lawmakers Already Moved to Rein In True-Ups
The General Assembly had already begun stripping away the pilot's flexibility before the PSC made it official. Maryland's Next Generation Energy Act, enacted in May 2025, banned future bill-increasing true-ups in multi-year rate plans and authorized $200 million in direct utility bill rebates for state residents, according to FirstEnergy.
Governor Wes Moore went further in May, signing the Utility RELIEF Act into law on May 12, prohibiting utilities from filing mid-cycle rate reconciliations altogether and requiring data center developers to fund their own electrical grid infrastructure upgrades. State officials estimated the omnibus legislation would save average households at least $150 annually, per the Office of Governor Wes Moore.
Those statutory changes set the stage for the frustrations that surfaced just weeks before the pilot's end. Hoodline reported last month that the Office of People's Counsel was pushing regulators to order BGE and Delmarva Power to refund $32 million in overcollected customer funds, arguing the utilities were leaning on the new rate laws to resist mid-cycle givebacks. BGE reported $28 million in overcollections, while Delmarva reported $4.27 million.
What Comes Next for Utility Customers
Rather than simply reverting to the old historic-test-year model, the commission established a structured review that will determine whether a redesigned multi-year plan or another regulatory alternative can satisfy Maryland law while protecting customers and supporting safe, reliable utility service. That review is expected to run through mid-2027.
BGE responded to the ruling by saying forward-looking ratemaking still has a place in Maryland's regulatory future, and the utility committed to working with the commission and stakeholders on an approach supporting low bills alongside reliable electric and gas service. Pepco and Delmarva Power each issued similar commitments to work with regulators and stakeholders going forward.
Barve, a former Democratic state delegate in Annapolis who now chairs the commission, is set to lead that process alongside ongoing rate disputes elsewhere in the state. Hoodline has also covered Potomac Edison's rate hike bid, a separate $52.8 million distribution-revenue request still under PSC review.
