American Sugar Refining Inc seeks waiver of $1.1M penalty for gas usage during curtailment

In a recent meeting held by the Public Service Commission of Maryland, a significant discussion centered around a penalty waiver request from American Sugar Refining Inc. The company is seeking relief from a $1.1 million distribution penalty imposed by Baltimore Gas and Electric (BGE) due to a curtailment event that occurred from January 20 to January 23, 2025. During this period, American Sugar consumed 2,253 therms of natural gas, primarily to relight boilers that had shut down due to unexpected equipment failures amid extreme weather conditions.

The commission's staff reviewed the waiver request and found that American Sugar had made extensive preparations prior to the interruption and acted promptly to address the unforeseen issues. They noted that the gas consumption during the event represented only about 1% of the company's typical usage over three days, which supports the argument for a good faith effort to comply with the interruption requirements.

However, the Office of People's Counsel (OPC) raised concerns regarding the excessive use of gas during the interruption, as the company exceeded the threshold of 575 therms per hour, which typically incurs additional penalties. Despite this, the staff highlighted that American Sugar's usage was only 2.7% of its billing demand, falling below the 5% threshold that would indicate a lack of good faith.

The discussion also touched on the broader implications of waiving the penalty. OPC argued that penalties serve an essential purpose in ensuring compliance with interruptible service agreements and that waiving the penalty could set a concerning precedent for future noncompliance. They emphasized the need for companies benefiting from lower rates under interruptible service to reinvest savings into their infrastructure to prevent similar issues.

As the commission deliberates on this matter, the outcome could have significant implications for how penalties are assessed in future cases and the responsibilities of companies utilizing interruptible service. The decision will reflect the balance between encouraging compliance and recognizing genuine efforts made by companies during unforeseen circumstances.