A Baltimore judge ruled Monday in favor of Baltimore Gas and Electric (BGE) in a dispute over the allocation of costs related to upgrades of the city’s underground conduit network. The decision upheld a Maryland Public Service Commission ruling permitting BGE to recover up to $120 million spent on the conduit system through customer rates over time.

The case centers on a 2023 agreement between BGE and the city of Baltimore concerning the conduit system, a network of tunnels and pathways beneath city streets that houses electric, telecommunications, and other utility lines. Under the arrangement, BGE committed to investing as much as $120 million in upgrades through 2026 in exchange for reduced occupancy fees and the ability to recover the costs gradually via rate increases.

The Maryland Office of People’s Counsel (OPC), representing residential utility consumers, challenged the deal in November. OPC argued that since Baltimore owns the conduit system, improvements should not be treated as utility-owned assets, and customers should not bear the full cost of such investments over multiple decades. They also asserted that other users of the conduit, such as telecommunications companies, benefit from the upgrades and should share in the expenses.

Baltimore City Circuit Court Judge Catherine Chen rejected these arguments, affirming the Public Service Commission’s endorsement of BGE’s accounting treatment. In her ruling, Chen pointed to evidence showing the conduit improvements qualify as capital assets, eligible for depreciation over their useful life. She highlighted the longstanding, interdependent relationship between BGE and the city regarding access to the conduit system.

The judge found no proof that other users of the conduit received discounted access or preferential treatment under the agreement. Chen further noted that it was unlikely for BGE to make improvements benefiting only its operations while excluding other conduit occupants.

OPC also contended that regulators erred by approving the investment without a formal benefit-cost analysis, but the judge disagreed. Chen observed that the regulator had previously rejected other BGE proposals over concerns about customer benefits and costs, but determined the conduit upgrade plan presented clearer advantages. Specifically, by reducing occupancy fees and focusing on projects enhancing electric distribution reliability, the arrangement demonstrated tangible benefits for customers.

While the ruling maintains the existing regulatory framework, it does not immediately alter customer bills. Instead, it allows BGE to continue spreading the costs of conduit improvements through rates over the expected lifespan of the infrastructure, rather than imposing the full expense upfront. Supporters of the agreement argue this method fairly aligns payments with the long-term benefits customers receive from the upgraded infrastructure.