DOCUMENTS: Charter amendment blocking sale of Baltimore’s conduits, and BGE’s proposal to end its franchise fees to the city
Here is what city voters approved and what BGE has privately proposed to the Scott administration
Above: The Exelon tower in Harbor Point. BGE is a wholly owned subsidiary of the Chicago-based company. (Fern Shen)
On Friday, January 13, Baltimore Gas & Electric (BGE) sent to city officials a draft document that would upend 120 years of governance of Baltimore’s cable system that routes electric, fiber-optic and telephone lines under city streets.
The municipal system charges commercial users franchise fees for use of the 700-plus-mile underground network.
BGE, a subsidiary of Chicago-based Exelon, wants to terminate the $28 million it pays the city in yearly fees in return for funding “up to” $124 million in conduit improvements over the next four years.
The previously undisclosed plan, revealed by The Brew, was denounced by former Mayor Bernard C. “Jack” Young, who said it conflicts with the charter amendment that permanently blocks the sale or transfer of the conduit system.
The amendment was placed on the November 2022 ballot by the City Council and approved by 77% of city voters. Then-Council President (now Mayor) Brandon Scott supported the idea.
Below is the text of the charter amendment, followed by the BGE draft agreement.
BGE was asked a series of questions about the agreement today, including the role of its general counsel David E. Ralph – formerly acting city solicitor – in crafting it.
Company officials declined, through a spokeswoman, to answer any of them.
“Thank you for the opportunity to follow up, but we have nothing to add,” wrote communications manager Talon J. Sachs.
As spelled out in detail in the document produced by BGE’s lawyers, the city would lose control of future capital improvements, while legally retaining ownership of the system.
How this might affect the city’s plan to use the conduit system to advance broadband coverage to poor and predominately Black neighborhoods is not mentioned in the agreement.
“Thank you for the opportunity to follow up, but we have nothing to add” – BGE spokeswoman.
Also left unanswered: how Comcast, Crown Castle, Verizon and other conduit users would be impacted by the BGE plan.
For example, will they continue to pay franchise fees to the city?
If so, those payments would amount to roughly $10 million a year (BGE’s electric cables, transformers and switches now occupy over 75% of conduit space).
Last fall, Mayor Scott said the conduit system “loses” $6-7 million a year.
“If the mayor’s figure is correct, won’t the loss of $30-plus million from BGE make it even more of a loser?” asked a contractor speaking today to The Brew.
Under a 2016 agreement that settled a lawsuit from BGE, the city is required to spend the revenues generated by the rental fees on service upgrades.
Between 2018 and 2021, the city says it rehabilitated 580,000 linear feet of ducts.
It is this 2016 agreement that the electric company now wants to amend.
BGE seeks “sole discretion” in determining how to spend the conduit funds it contributes, relegating the city to making recommendations, which might or might not be accepted, once a year.
The plan “shocked the professional staff” at the Department of Transportation’s conduit division, said the source, who asked not to be identified.
The conduit division is comprised of 120 funded positions.
Its current FY23 budget allots $6.2 million to salaries and $2 million to contractual services, of which $1.7 million is spent for inspections and testing.
The source said the $1 million maintenance fee that BGE is willing to pay the city for annual conduit upkeep would not be enough to meet the costs of a network that dates back to the 1890s.
Conduit Charter Amendment Text
Introduced by President Young and Council members Sharon Green Middleton, Isaac “Yitzy” Schleifer, Robert Stokes, Brandon Scott, Zeke Cohen, Kristofer Burnett, Bill Henry, Leon Pinkett, Ryan Dorsey, John Bullock, Edward Reisinger, Mary Pat Clarke and Eric Costello.
Introduced and read first time: March 18, 2019.
A RESOLUTION OF THE MAYOR AND CITY COUNCIL concerning Charter Amendment – Underground Conduit System – Sale, Transfer or Franchise Prohibited.
FOR the purpose of prohibiting the sale, transfer, or franchising of the City’s underground conduit system for cables, wires, and similar facilities; excepting this underground conduit system, its operations and uses, from the Charter provisions otherwise authorizing the grant of franchises or rights relating to the operation or use of public property or places; and submitting this amendment to the qualified voters of the City for adoption or rejection.
BY proposing to amend Article VIII – Franchises Section Baltimore City Charter (1996 Edition)
SECTION 1. BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF BALTIMORE, That the City Charter is proposed to be amended to read as follows:
Article VIII. Franchises – Authority to grant.
The title of the City in and to its waterfront, wharf property, land under water, public landings, wharves and docks, streets, lanes, and parks, its sewer system and water supply system, as described in Article VII, §§ 33 and of this Charter, AND ITS UNDERGROUND CONDUIT SYSTEM FOR CABLES, WIRES, AND SIMILAR FACILITIES is hereby declared to be inalienable.
With the exception of the City’s sewer and water-supply system AND UNDERGROUND CONDUIT SYSTEM FOR CABLES, WIRES, AND SIMILAR FACILITIES, the City may grant for a limited time and subject to the limitations and conditions contained in the Charter specific franchises or rights in or relating to any of the public property or places mentioned in the preceding sentence; provided that such grant is in compliance with the requirements of the Charter, and that the terms and conditions of the grant shall have first been authorized and set forth in an ordinance duly adopted.
Every such grant shall specifically set forth and define the nature, extent and duration of the franchise or right thereby granted, and no franchise or right shall pass by implication under any such grant; and, notwithstanding any such grant the City shall at all times have and retain the power and right to reasonably regulate in the public interest the exercise of the franchise or right so granted; and the City shall not have the power by grant or ordinance to divest itself of the right or power so to regulate the exercise of such franchise or right.
SECTION 2. AND BE IT FURTHER RESOLVED, That this proposed amendment to the City Charter be submitted to the legal and qualified voters of Baltimore City, for adoption or rejection, in accordance with Article XI-A, § 5 of the Maryland Constitution, in the form specified by the City Solicitor.
Text of BGE’s 1/13/23 draft amendment
• Fern Shen contributed to this story. To reach a reporter: email@example.com