In a rebuke to the Public Service Commission and a win for the Severstal Sparrows Point steel mill, the Court of Special Appeals on Friday rejected a 2008 surcharge levied on Sparrows and other commercial customers to keep Baltimore Gas & Electric electricity rates affordable for some small businesses.

Thanks to soaring energy prices and a change in the way customers were classified, some businesses were set to see their electric bills shoot up by 40 percent in the summer of 2008. To provide relief, the PSC capped the increase at 15 percent for the affected businesses and spread the difference among all non-residential BGE customers.

Severstal and others sued, arguing that the commission didn’t have the authority to shift costs in such a way. The policy increased electric bills for the mill by about $400,000 that summer, according to the court’s decision. The appeals court reversed a lower court decision upholding the PSC’s move.
The decision sets the stage for a possible PSC appeal to the Court of Appeals, Maryland’s high court, or a move by the commission to raise others’ rates to pay back Severstal and the other plaintiffs. In all about $7 million is at stake.

PSC Chairman Doug Nazarian said the commission was studying the ruling.

You can read the decision here.