The Maryland Public Service Commission (PSC) regulates the rates and services of privately owned water companies in Maryland. There are about 26 of these companies serving customers in rural and some suburban areas of the State. The MD PSC does not regulate publicly run water systems, such as the metropolitan system run by the Baltimore City Department of Public Works, or the Washington Suburban Sanitary Commission (WSSC). Most residential households in Maryland receive water and sewer services from public water systems or the WSSC.
Private water companies must file applications with the MD PSC to increase rates for water service. The MD PSC typically will assign the application to a Hearing Examiner to conduct a rate case hearing. OPC reviews the applications to determine if there is an impact on residential customers, and frequently retains an expert to review the application and additional documentation and file testimony. OPC examines the proposals for basic rates, connection fees, surcharges, and any other fees. Basic rates require an examination of the expenses of the company, such as maintenance, salaries and infrastructure investment, which are analyzed and compared with other similar companies to see if the requested increase is reasonable. Surcharges may be for expenses that have not been recovered in base rate revenues from customers, but are regular and ordinary business expenses which are properly recoverable.
Some water companies obtain and treat water for distribution to their customers, while others have determined that the least expensive option for their customers is to purchase water from other companies at bulk rates, and pass that cost without marking up the rate for a return. An unexpected large expenditure may prompt either the filing of a request for new water rates to the PSC or the filing a request for a surcharge to amortize the cost of the large expenditure over a shorter period of time.