Despite efforts by lawmakers, energy bills are going up again. Here’s why.

Discussions about rising energy costs may have dominated this past Maryland General Assembly session. But even higher bills are on the way.

Beginning June 1, elevated rates took effect for utilities across Maryland, from Baltimore Gas & Electric to Delmarva Power and Pepco. The reasons go back to economics class: low supply and high demand. But who is to blame depends on who you ask.

Ratepayer advocates are quick to point the finger at PJM Interconnection, which operates the power grid in a 13-state region, including Maryland, for policies that have driven rates higher. They argue it has been slow to bring renewable energy projects online, constraining the supply, and it failed to account for skyrocketing demand from data centers.

PJM says it’s been warning of the impending supply crunch since “early 2023,” and that a combination of other market forces are at play — including climate change policy shuttering coal plants.

Years of market changes and policy choices have landed Maryland ratepayers in their current predicament, said Laurel Peltier, chair of the Maryland Energy Advocates Coalition, which focuses on low-income utility ratepayers.

“It’s like a teapot that’s been simmering — and it’s been simmering for a decade,” said Peltier, who is also an AARP Maryland utility advocate.

How much are my bills going up this time?

The exact amount of the increase differs depending on where you live. A report from the Maryland Office of People’s Counsel, released last August, estimated that Delmarva Power households could see a $4 monthly increase, Pepco and SMECO customers could see a $14 increase and Potomac Edison customers could see an $18 increase.

BGE customers would fare the worst, with a $21 jump. But BGE ratepayers got some welcome news last week, when Maryland’s utility regulator, the Public Service Commission, ordered the utility company to spread out the increase, dulling the impact this summer, when bills will already be soaring due to higher energy use, and sharpening the impact in the fall, when bills are typically lower.

As a result, the increase will be $10 to $15 less than expected on customer’s bills from June through August. But from September through November, bills will be $10 to $15 higher than expected, according to Kathy Fueston, a spokesperson for the PSC.

But ultimately, BGE customers will pay the same total amount.

What’s the reason for this latest increase?

The story starts with PJM Interconnection, which runs an annual auction called the capacity market auction, which essentially ensures there is sufficient power during peak times.

Last year’s auction, which covers 2025, cleared at a record high price — an 800% increase compared to the year before, costing ratepayers a total of $14.7 billion in capacity costs, compared to $2.2 billion previously.

PJM blames the shutdown of costly coal and oil plants, and energy demands from data centers and the electrification of homes and cars, among other factors.

“These higher prices are the result of a loss in electricity supply caused primarily by decarbonization policies that have led to an uptick in generator retirements, coupled with an unprecedented spike in electricity demand due largely to the advancement of data centers to power artificial intelligence, the electrification of vehicles and heating systems, and the onshoring of U.S. manufacturing,” wrote Jeffrey Shields, a spokesman for PJM, in a statement.

But Maryland People’s Counsel David Lapp, who represents Maryland ratepayers, argued that PJM is “not being straightforward.”

He argues that power-hungry data centers, largely in Virginia, are the primary reason for the increase in demand. If it weren’t for those facilities, the demand, or load, on the PJM grid might not be increasing at all — even with the rise of EVs and electric heat pumps.

“Those load forecast changes are really driven by data-center growth,” Lapp said. “There has been very little growth in demand for quite some time, because of efficiency technologies. More efficient light bulbs, that sort of thing.”

It’s true that Maryland fossil fuel power plants are retiring, and this is impacting energy markets, Lapp said. But Lapp lays some of this blame at PJM’s feet.

Faced with a capacity shortage, PJM is requiring two fossil fuel power plants that were going to be retire this year, Talen Energy’s Brandon Shores and H.A. Wagner, to keep operating through 2029. It will cost ratepayers about $145 million annually to keep coal-fired Brandon Shores running and $35 million annually for oil-powered Wagner.

But when it held its annual capacity auction in 2024, PJM did not include the output from the two Talen Energy plants in the mix. That caused prices for 2025 to go up: The Office of People’s Counsel estimates that costs rose $5 billion in the auction because of the exclusion of the two plants.

Since last summer’s auction, PJM has changed its policy, with the approval of federal regulators. The electricity generated from “reliability must-run agreements,” like the ones for Brandon Shores and H.A. Wagner, must be included in the auction.

“Everyone knows that that’s not fair, to require customers to pay twice, and yet, that’s exactly what’s going to happen starting June 1,” Lapp said.

Emily Scarr, a senior adviser at Maryland PIRG who focuses on energy issues, said PJM also should have predicted that coal plants would retire, and that it is responsible for bringing new power generation onto the grid in response.

“They say it’s a supply and demand imbalance. But what they don’t explain is: ‘Oh, we’re actually the ones who are in charge of controlling supply and demand, and we haven’t done our job,’” Scarr said.

Peltier, the low-income ratepayer advocate, worries about the customers who have been swept up in the recent price hikes, and are now behind on their bills. For instance, BGE recently reported that residential customers were a total of $171 million in arrears, compared to $97 million just last June. In a statement, BGE spokesman Nick Alexopulos cited cold temperatures in January and February 2025, which forced customers to use more energy to heat their homes.

But Republicans in the General Assembly say state policymakers are to blame for the supply shortage, and the resulting rate increases, which they attribute to the state’s policies to reduce carbon emissions. They note that all the state’s coal plants have announced plans to shut down in the years ahead.

“Maryland’s soaring electric rates are not a mystery — they’re a direct result of bad policy choices made by Democratic leaders,” wrote Senate Minority Whip Justin Ready in a recent statement.

“Their obsession with ‘green goals’ has come at the expense of energy reliability and affordability,” Ready wrote. “Now, plants they forced offline are still running because the grid can’t survive without them, and ratepayers are stuck paying hundreds of millions for that mistake.”

Lapp disagrees that Maryland policies played a role. Perhaps some of the blame could be chalked up to federal Clean Air Act policy requiring changes to how plants are operated, he said, but largely, it’s economics.

“Gas is a lot cheaper. Renewables don’t require fuel,” Lapp said. “So, there’s a reason why most of the PJM queue is wind and solar and battery.”

But a backlog in PJM’s queue for new power generation to come online has also influenced the supply curve, Scarr said.

“They’ve created this whole problem themselves, and if they just let clean energy connect, we wouldn’t be in this situation,” Scarr said.

A recent report predicted that Maryland ratepayers could save an average of $546 a year on their electric bills from 2025 to 2040 if PJM implements a laundry list of reforms to clear the bottleneck.

For its part, PJM argues that it is already making a number of reforms to the queue, including a new initiative to expedite “shovel-ready” projects.

In early May, PJM released the list of 51 projects it will expedite through the program, including 22 in Virginia and two in Maryland: a battery storage project in Harford County and an upgrade at a natural gas plant in Prince George’s County.

What happens next?

Lapp and the PSC, backed by 87 Maryland lawmakers, have asked the Federal Energy Regulatory Commission to provide relief from rising rates, by overturning the $5 billion worth of auction costs associated with the Talen Energy deal.

“You just can recalculate the results of the auction, by counting the [Talen Energy] units,” Lapp said. “They could do that quickly.”

A FERC spokesperson declined to comment on when the commission might issue a ruling.

Lapp’s office asked FERC for expedited consideration before June 1. With a decision now coming later than that, Lapp said it’s possible that consumers could receive a future credit on their bills, if FERC rules in his favor.

All Maryland ratepayers are already due to receive a rebate on their utility bills next month. The rebate is estimated at $40 per household, though it depends on a customer’s electricity usage. A second payment is scheduled for January.

It comes from the Maryland General Assembly, which passed an energy reform package just before it adjourned in April. The total sum, about $200 million, is coming from the Strategic Energy Investment Fund, which is fueled by electricity generators, who submit “alternative compliance payments” when they do not purchase the required amount of renewable energy credits to comply with state law.

But the main thrust of the General Assembly’s energy reforms was increasing power generation and energy storage in the state, by creating streamlined permitting processes for both at the Maryland Public Service Commission. Lawmakers on both sides of the aisle have highlighted the fact that the state imports more power from other states than it generates within its borders.

Lapp questions whether increasing power generation in the state is needed, especially given that improvements are underway to transmission infrastructure, including to accommodate the eventual closure of Brandon Shores and Wagner.

“The fact that Maryland is a net importer, that’s nothing new, and it’s nothing to be alarmed about, especially because the amount that Maryland imports does not reflect a limitation on Maryland’s ability to generate energy,” he said. “It’s economics.”

He also wonders whether the legislature’s streamlined permitting process at the PSC is a big enough carrot to actually spur significant new power generators to set up shop in Maryland.

“Private companies, they already are able to build plants in Maryland, if the economics work out. So the question there is, does a little easier siting process — Does that change the economics?” Lapp said. “I’m not sure that it will.”