Customers of Baltimore Gas & Electric Co. will see their power bills creep up in the spring once the utility giant floats bonds to pay for the electricity it has been sending into homes.
“All the costs we are incurring to go out and get the power we are deferring,” said Mark Case, BGE?s vice president of regulatory affairs
The power company, a division of Constellation Energy, will sell about $630 million in bonds to pay for the power that the company is selling below market value as part of its rate-stabilization plan.
Customers will be charged about $5 a month for the next 10 years to repay the bonds, but the actual amount will be based on the amount of power used, Case said.
The need for the loan came after the state moved to stave off a 72 percent rate increase this past year. The state and the power giant agreed to a 15 percent rate hike with customers paying back the deferred amount plus interest.
While the state?s Public Service Commission said customers would begin to pay the money this month, Case said BGE will wait until after its bonds are sold before collecting the money. That should be sometime in March, he said.
By selling the bonds with a Triple A rating, BGE can secure a lower interest rate than on the open financial market. It?s a move Case said will save $140 million.
But while BGE customers will be paying more, they also will be earning more interest on the money the power company holds as a deposit.
The PSC last month raised the interest rate from 4.1 percent annually to 5 percent, the commission said in a statement.
Case said BGE typically requires deposits in the amount of two months of utility service and holds the deposits for a year. Customers are then refunded the deposit, plus interest earned, after about a year.
