Maryland Office of People's Counsel v. Maryland Public Service Commission

ARTHUR, J. In 2013 the General Assembly enacted legislation enabling regulated gas companies to recover the estimated costs of certain infrastructure replacement projects through a surcharge on customer bills. See Md.Code (1998, 2010 Repl.Vol., 2014 Supp.), § 4-210 of the Public Utilities Article (“PUA”). Shortly after the statute took effect, Baltimore Gas and Electric Company (“BGE”) sought approval of a plan to accelerate the replacement of outdated gas distribution infrastructure and to begin imposing a customer surcharge during the initial implementation of the plan. The Public Service Commission ⁴⁸⁸ approved the plan, subject to the condition that BGE could not implement the surcharge until it submitted additional information about the individual infrastructure projects that were to be undertaken in 2014.

The Circuit Court for Baltimore City affirmed the Commission’s order after the Office of People’s Counsel (“OPC”) petitioned for judicial review. On appeal, OPC contends: (1) that the Commission erred by authorizing BGE to collect estimated project costs before the completion of each project; and (2) that the Commission acted unlawfully by conditionally approving the plan before the Commission had evaluated the individual projects. We conclude that OPC has shown no basis for reversing the Commission’s decisions. Legislative Background A. Parties to this Appeal This appeal involves three entities established by or regulated under the Public Utilities Article of the Maryland Code.

The Maryland Public Service Commission is an independent unit in the executive branch of State government (PUA § 2-101(b)), with jurisdiction over public service companies that operate utility businesses within the State. PUA § 2-112(a). The Commission’s primary duties are to “supervise and regulate” the companies subject to its jurisdiction to “ensure their operation in the interest of the public” and to “promote adequate, economical, and efficient delivery of utility services in the State without unjust discrimination^]” PUA § 2-113(a)(1)(i). BGE is a public service company regulated by the Commission.

In general, public service companies have a duty to “furnish equipment, services, and facilities that are safe, adequate, just, reasonable, economical, and efficient, considering the conservation of natural resources and the quality of the environment.” PUA § 5-303. BGE provides gas service to approximately 655,000 customers across 800 square miles in Baltimore City and central Maryland. ⁴⁸⁹ OPC is an agency that acts independently of the Public Service Commission. OPC has a duty to “appear before the Commission and courts on behalf of residential and noncommercial users in each matter or proceeding over which the Commission has original jurisdiction, including a proceeding on the rates, service, or practices of a public service company!.]” PUA § 2—204(a) (2). B. Traditional Rate-Making Procedures Title 4 of the Public Utilities Article governs the Commission’s rate regulation authority.

The Commission has “the power to set a just and reasonable rate of a public service company!.]” PUA § 4—102(b). A public service company has a corresponding duty to “charge just and reasonable rates for the regulated services that it renders.” PUA § 4-201. In ordinary ratemaking proceedings, the Commission analyzes data from a prior “test year” to project a utility’s future income and expenses: The [Public Service Commission] establishes [just and reasonable] rates by examining the utility’s income and expenses during a test year, calculating the rate base (the fair value of the property used and useful in rendering service) during that year, determining the utility’s cost of capital (its required rate of return), and then multiplying that rate of return against the rate base. The result is the amount of income to which the utility is entitled.

To the extent that level of income significantly differs from the test year’s net income, the Commission orders an adjustment in the utility’s rates — an increase or a decrease, as the case may be. Bldg. Owners & Managers Ass’n of Metro. Baltimore, Inc. v. Pub.

Serv. Comm’n of Maryland, 93 Md.App. 741, 753 , 614 A.2d 1006 (1992); see Office of People’s Counsel v. Maryland Pub. Serv. Comm’n, 355 Md. 1, 8 , 733 A.2d 996 (1999) (citing Pub.

Serv. Comm’n of Maryland v. Baltimore Gas & Elec. Co., 273 Md. 357 , 360 n. 2, 329 A.2d 691 (1974)); Maryland People’s Counsel v. Heintz, 69 Md.App. 74, 84-85 , 516 A.2d 599 (1986). ⁴⁹⁰ In a conventional proceeding to set rates, the Commission will “calculate the test year’s rate base, i.e., ‘the fair value of the company’s property used and useful’ in rendering the service.” Severstal Sparrows Point, LLC v. Pub. Serv.

Comm’n of Maryland, 194 Md.App. 601, 620 , 5 A.3d 713 (2010) (quoting PUA § 4-101(3)). A public service company ordinarily is not entitled to recover costs simply because the costs were incurred prudently; instead, the Commission normally requires the company to show that the costs relate to an asset “used and useful” in providing service. E.g. Columbia Gas of Maryland, Inc. v. Pub.

Serv. Comm’n of Maryland, 224 Md.App. 575, 584-86 , 121 A.3d 224 (2015) (holding that Commission did not err in denying portion of gas company’s request for rate increase that sought to recover anticipated remediation costs for property not used and useful in providing gas service). A recent rate case, In the Matter of the Application of the Washington Gas Light Company for Authority to Increase Its Existing Rates and Charges and to Revise Its Terms and Conditions for Gas Service, Order No. 84475, 102 Md.P.S.C. 332 (2011), illustrates limits on this traditional recovery model. Along with a rate increase application, Washington Gas Light sought approval of an “Accelerated Pipe Replacement Plan,” by which it would finance replacement of its aging gas infrastructure through a customer surcharge.

Id. at 341, 378-79. The Commission declined to approve that proposed surcharge, commenting that approving a surcharge merely because a company plans to increase its infrastructure investments “would represent a fundamental shift from long-standing rate-making principles[.]” Id. at 342; see also id. at 383. The Commission determined that the gas company could recover the costs of its plan by filing “more frequent rate cases” to adjust the rate “in smaller increments” after the assets were placed in service. Id. at 342. 1 ⁴⁹¹ C. Enactment of the 2013 STRIDE Law Between 2011 and 2013, the General Assembly considered a series of bills that would empower the Public Service Commission to authorize gas companies to promptly recover infrastructure replacement costs through a customer surcharge. 2 The 2013 General Assembly enacted “An Act Concerning Gas Companies — Rate Regulation — Infrastructure Replacement Surcharge.” The proposal was commonly referred to as the Strategic Infrastructure Development and Enhancement (STRIDE) law.

The law took effect on June 1, 2013. See 2013 Md. Laws, ch. 161, § 2. The legislation added section 4-210 to the Public Utilities Article. This new section includes an express statement of legislative intent: “It is the intent of the General Assembly that the purpose of this section is to accelerate gas infrastructure improvements in the State by establishing a mechanism for gas companies to promptly recover reasonable and prudent costs of investments in eligible infrastructure replacement projects separate from base rate proceedings.” PUA § 4-210(b).

Pursuant to this section, a gas company may file “a plan to invest in eligible infrastructure replacement projects” accompanied by “a cost-recovery schedule ... that includes a fixed annual surcharge to recover reasonable and prudent costs” of those projects. PUA § 4-210(d)(1). A plan filed by a gas company must include: “(i) a time line for the completion of each eligible project; (ii) the estimated cost of each project; ⁴⁹² (iii) a description of customer benefits under the plan; and (iv) any other information the Commission considers necessary to evaluate the plan.” PUA § 4-210(d)(2). The Commission is required to “take a final action to approve or deny the plan” within 180 days after the gas company files the plan.

PUA § 4-210(e)(1)(ii). The Commission “may approve a plan if it finds that the investments and estimated costs of eligible infrastructure replacement projects are: (i) reasonable and prudent; and (ii) designed to improve public safety or infrastructure reliability over the short term and long term.” PUA § 4-210(e)(3). The term “[eligible infrastructure replacement” is defined as “a replacement or an improvement in an existing infrastructure of a gas company that: (i) is made on or after June 1, 2013; (ii) is designed to improve public safety or infrastructure reliability; (iii) does not increase the revenue of a gas company by connecting an improvement directly to new customers; (iv) reduces or has the potential to reduce greenhouse gas emissions through a reduction in natural gas system leaks; and (v) is not included in the current rate base of the gas company as determined in the gas company’s most recent base rate proceeding.” PUA § 4-210(a)(3). The cost-recovery schedule associated with a plan must include a fixed annual surcharge, which may not exceed $2 per month for each residential customer, and which is capped pursuant to a formula for non-residential customers.

PUA § 4—210(d)(4)(i). After the approval of a plan, the gas company must file an annual reconciliation “to adjust the amount of a surcharge to account for any difference between the actual cost of a plan and the actual amount recovered under the surcharge.” PUA § 4-210(h). A surcharge established by the cost-recovery schedule “shall be in effect for 5 years from the date of initial implementation of an approved plan.” PUA § 4-210(g)(1)(i). The statute sets forth specific requirements for calculating the “estimated cost” of each eligible project included in the plan.

PUA § 4-210(d)(3). Of central importance to the in ⁴⁹³ stant appeal is a statutory provision that specifies when the estimated project costs may be recovered through the surcharge. Subparagraph (d)(3)(ii) provides that the “estimated project costs ... are collectible at the same time the eligible infrastructure replacement is made.” PUA § 4—210(d)(3)(ii) (emphasis added). 3 Factual and Procedural Background A. BGE’s Application On August 2, 2013, one month after the effective date of the statute, BGE submitted an “Application ... for Approval of a Gas System Strategic Infrastructure Development and Enhancement Plan and Accompanying Cost Recovery Mechanism.” According to the application, BGE wished to “accelerate significantly” the replacement of “gas system assets that have reached the end of their useful life,” in order to “enhance safety and reliability for its customers.” BGE proposed to completely replace the oldest and most leak-prone components of its gas distribution system over a period of 30 years. The application stated that BGE planned to replace the entire population of five “asset classes.” 4 According to BGE, those assets had been installed many decades ago, in most cases more than 50 years earlier. ⁴⁹⁴ BGE planned to invest a total of $400 million during the initial five-year period from 2014 to 2018.

BGE proposed a monthly surcharge of $0.32 per residential customer and $1.87 per non-residential customer, beginning February 2014. The surcharge would then increase each year until 2017, when it would be capped at $2 per month for residential customers and $11.55 per month for non-residential customers. Upon receiving the application, the Commission suspended the proposed rates and initiated proceedings to evaluate the plan. OPC participated in the proceedings to represent the interests of ratepayers. 5 B. Hearing Before the Commission The parties presented testimony and arguments at an evi-dentiary hearing on November 12, 13, and 14, 2013, in accordance with PUA § 3-107 and COMAR 20.07.02.

In support of the application, four BGE executives testified regarding the details of the proposed infrastructure replacements, the expected customer benefits, and the customer surcharge. According to BGE’s witnesses, the five “asset classes” described in the application represented only 21 percent of BGE’s gas distribution system mileage, but had accounted for 73 percent of all gas leak repairs in 2012. BGE estimated that the plan would roughly double the existing rate at which BGE had been replacing its pipelines. BGE’s proposal envisioned that customers would begin paying a surcharge on their monthly bills contemporaneously with, and in many cases after, its upgrades of the gas-delivery infrastructure.

For example, the company expected to invest $65 million in its STRIDE projects in 2014 and to collect $3 million from customers that year. According to BGE, the total charges collected over five years would cover less than 10 percent of BGE’s cumulative investments in the projects. The ⁴⁹⁵ company would then recover the remainder of the costs over the useful life of the replaced assets. OPC offered testimony from Dr. Karl Pavlovie, an energy industry consultant, who recommended that the Commission deny the application.

Among other things, Dr. Pavlovie contended that BGE’s plan was deficient in that it did “not identify or specify the investment costs” for replacing the targeted assets. Dr. Pavlovie opined that BGE’s proposed cost-recovery mechanism would contravene the established ratemaking principle that “investment cost recovery from rate payers does not begin until the associated assets are placed in service and used and useful.” He interpreted language from PUA § 4-210(d)(3)(ii), stating that “estimated project costs ... are collectible at the same time the eligible infrastructure replacement is made,” to mean that “project costs can be included in the surcharge once a project is completed,” (Emphasis added.) According to Dr. Pavlovie, the surcharge should not be based on future cost projections, but “should be calculated on actual historical costs in a [12] month period and collected over the subsequent 12 month period.” The foundation of his interpretation was his understanding that cost recovery under the new statute should be “consistent with the principles underlying the revenue requirement model[.]” Disputing Dr. Pavlovic’s interpretation, BGE and its witnesses contended that the intent of the legislation was to accelerate improvements by providing for prompt cost recovery contemporaneously with the implementation of the projects. The Commission’s staff also participated in the hearing pursuant to PUA § 3-104(e). A staff engineer commented that BGE’s submissions were not detailed enough for staff to evaluate whether the plan met all statutory requisites for approval, because BGE had not identified specific projects to be implemented.

The staff recommended that the Commission direct BGE to present a more detailed list of proposed 2014 projects within 30 days after an initial order, so that the ⁴⁹⁶ Commission staff could ensure that each project met eligibility requirements. A BGE representative agreed to supply the remaining necessary information after the conclusion of the case. C. The Commission’s Conditional Approval of the Application On January 29, 2014, the final day of the 180-day period for consideration of the application (see PUA § 4—210(e)(1)), the Commission issued Order No. 86147. The Commission set forth its findings and conclusions in a 40-page opinion that accompanied the order.

The Commission declared: “[W]e find that BGE’s Application meets the requirements of [s]ection 4-210 and we conditionally grant the Company’s request____We approve the proposed cost recovery surcharge subject to the requirements set forth in [s]ection 4-210 and this Order.” The Commission nevertheless found BGE’s submissions to be lacking in a few important respects. Specifically, the Commission found that the BGE had not sufficiently identified the “time line for completion of each eligible project” and the “estimated cost of each project” pursuant to PUA § 4-210(d)(2)(i) and (ii). (Emphasis added.) As a result, the Commission could not yet determine whether the proposed investments and estimated costs were “reasonable and prudent” to qualify for approval under PUA § 4-210(e)(3). The Commission wrote: According to BGE, the initial five year (2014-2018) estimated cost for its STRIDE Plan will be $400 million.

BGE takes the position that each vintage asset class represents a “project.” Thus, according to BGE, the timeline for each project ranges from three years for the Ski-Bar risers to 30 years for cast iron main and copper services. However, we conclude that the term “project” in Section 4-210(d)(2) means something more specific, concrete and practical than a broadly outlined plan. In fact, the Company essentially concedes as much, since BGE agreed to file a detailed list of 2014 projects within 30 days of a Commission order approv ⁴⁹⁷ ing its Plan, as Staff recommended, with the same level of detail as is found in the Company’s annual gas distribution system report. In order for the Commission to conclude that each project is reasonable and prudent both from an infrastructure and cost standpoint, we condition approval of BGE’s Plan ... upon a Commission review of the time line and costs for each of BGE’s projects.

The Commission directed BGE to file a list of projects to be initiated in 2014, along with the time lines and estimated costs for each project. The Commission gave BGE 30 days to file the list. It ordered that BGE could not implement the 2014 surcharge until after the Commission had approved the 2014 project list, time lines, and cost estimates. The Commission required BGE, each year thereafter, to submit information about projects for the upcoming year.

Addressing the question of statutory interpretation that had dominated much of the proceeding, the Commission concluded that BGE would not be required to await the completion of each infrastructure project before collecting the surcharge. The Commission recognized that “the new STRIDE statute represents a departure from traditional ratemaking principles.” The Commission emphasized that the express legislative purpose was that “reasonable and prudent costs” could be “recovered ‘separate from base rate proceedings.’ ” Consistent with that reading, the Commission determined that the statutory provision “that estimated project costs ‘are collectible at the same time the eligible infrastructure replacement is made’ ... authorizes contemporaneous cost recovery at the time eligible infrastructure replacement work is being performed.” The Commission clarified, however, that “estimated project costs may not be recovered by the surcharge until BGE has begun making its initial STRIDE replacements.” In a footnote, the Commission added that it anticipated that approval of those submissions would be completed “at an Administrative Meeting after Staff and the Commission have had a reasonable time to review BGE’s project filing.” ⁴⁹⁸ At the conclusion of Order No. 86147, the Commission ordered that BGE’s STRIDE plan was “approved, subject to the acceptance by BGE of the conditions contained in this Order[.]” The Commission also ordered BGE to notify the Commission within 30 days whether it would accept all conditions contained in the order. Finally, the Commission ordered that the plan would be denied if BGE failed to do so. D. Developments after the Conditional Approval On February 21, 2014, BGE formally notified the Commission that it had accepted the conditions imposed by Order No. 86147.

BGE submitted a list of 55 projects to be initiated in 2014, “including project description, location, estimated cost, type of infrastructure replaced, risk assessment ..., estimated project completion date[,] and reasons for replacement.” Citing changed circumstances since the initial application, BGE estimated a decrease in capital expenditures for 2014 projects. BGE also asked the Commission to authorize higher surcharges for residential customers and for most categories of non-residential customers. Shortly thereafter, on February 27, 2014, OPC filed a petition for judicial review in the Circuit Court for Baltimore City. Both the Commission and BGE filed responses.

Meanwhile, OPC submitted comments to the Commission regarding BGE’s 2014 projects. The parties again appeared at the Commission’s administrative meeting on March 26, 2014, at which the Commission heard arguments, but did not receive any new sworn testimony. The Commission’s staff announced that it had reviewed the project list and recommended that the Commission approve the completed application. The commissioners voted to approve the projects and to authorize BGE to impose the requested surcharges effective April 2014.

The Commission issued a letter order after the meeting to formalize its decision. In the action for judicial review in the circuit court, OPC challenged aspects of both Order No. 86147 and the March 26, 2014, letter order. Among other things, OPC contended that ⁴⁹⁹ the Commission had erred by concluding that the statute authorized BGE to collect estimated project costs before the proposed projects were completed and by conditionally approving the plan before the Commission had received a list of projects. At a hearing on September 5, 2014, the circuit court issued an oral decision denying OPC’s petition.

On September 12, 2014, the circuit court entered an order affirming Order No. 86147. OPC noted a timely appeal from the circuit court’s judgment. Questions Presented OPC presents the following two questions, which we quote: 1. Did the Commission act unlawfully and in contravention of PUA § 4—210(d)(3)(ii), when it issued Order No. 86147, in which the Commission authorized BGE to begin collection of the estimated cost of each eligible infrastructure replacement before it was made? 2.

Did the Commission act unlawfully when it issued Order No. 86147, in which the Commission approved BGE’s STRIDE Plan even though the Commission found that the Plan did not consist of “projects” as expressly required by PUA §§ 4-210(d)(1) and (e)(3)? As discussed below, OPC has failed to show that the Commission erred or otherwise acted unlawfully. Discussion I. The Public Utilities Article “sets forth the limited ‘scope of review' ... over decisions by the Public Service Commission.” Town of Easton v. Pub. Serv.

Comm’n, 379 Md. 21, 30 , 838 A.2d 1225 (2003). It states: “Every final decision, order, or regulation or the Commission is prima facie correct and shall be affirmed unless clearly shown to be: (1) unconstitutional; (2) outside the statutory authority or jurisdiction of the Commission; (3) made on unlawful procedure; (4) arbitrary or capricious; (5) affected by other error of law; or (6) if the ⁵⁰⁰ subject of review is an order entered in a contested proceeding after a hearing, unsupported by substantial evidence on the record considered as a whole.” PUA § 3-203 (emphasis added). The appellate court’s task is to review the Commission’s decision, not the decision of the circuit court. See Mid-Atlantic Power Supply Ass’n v. Maryland Pub.

Serv. Comm’n, 143 Md.App. 419, 432 , 795 A.2d 160 (2002). A. Commission’s Interpretation of Cost Collection Provisions As the primary issue in this appeal, OPC contends that an “error of law” affected the Commission’s order. OPC specifically contends that the Commission erred when it interpreted the statute as authorizing a gas company to recover estimated project costs after the initial implementation of the projects and before the completion of each project.

OPC’s challenge concerns the language of a provision describing the “estimated costs” included with a gas company’s infrastructure replacement plan: “The estimated project costs ... are collectible at the same time the eligible infrastructure replacement is made.” PUA § 4—210(d)(3)(ii). In a section of the opinion titled “OPC’s Objections,” the Commission wrote: OPC argued that project costs may not be included in the surcharge until projects are completed. The traditional rate base recovery models have only allowed utilities to collect revenues based upon assets that are currently used and useful. However, in this case there is legislation that specifically states that the estimated project costs “are collectible at the same time the eligible infrastructure replacement is made,” and that reasonable and prudent costs shall be recovered “separate from base rate proceedings.” The statute authorizes contemporaneous cost recovery at the time eligible infrastructure replacement work is being performed. ⁵⁰¹ The parties disagree over the appropriate weight that should be given to this interpretation.

Generally, “[a] great deal of discretion is necessarily vested in the Commission in order that it may properly discharge its important and complex duties.” People’s Counsel v. Pub. Serv. Comm’n, 52 Md.App. 715, 722 , 451 A.2d 945 (1982). “Because the Commission is well informed by its own expertise and specialized staff, a court reviewing a factual matter will not substitute its own judgment on review of a fairly debatable matter.” Communications Workers of Am. v. Pub. Serv.

Comm’n, 424 Md. 418, 433 , 36 A.3d 449 (2012) (citing Pub. Serv. Comm’n of Maryland v. Baltimore Gas & Elec. Co., 273 Md. 357, 362 , 329 A.2d 691 (1974)).

In contrast to administrative findings of fact, questions of law, including the proper construction of a statute, are subject to more plenary review by the courts. Office of People’s Counsel v. Maryland Pub. Serv. Comm’n, 355 Md. 1, 14 , 733 A.2d 996 (1999).

An agency’s interpretation of a statute that it administers “may be entitled to some deference,” but “[t]hat deference is, by no means, dispositive” and not as great as the deference owed to factual findings. Id. “The weight to be accorded an agency’s interpretation of a statute depends upon a number of considerations.” Id. at 17 , 733 A.2d 996 (quoting Baltimore Gas & Elec. Co. v. Pub. Serv.

Comm’n, 305 Md. 145, 161 , 501 A.2d 1307 (1986)) (quotation marks omitted). These considerations include whether agency officials adopted their view “soon after its passage” (Office of People’s Counsel v. Maryland Pub. Serv. Comm’n, 355 Md. at 16 , 733 A.2d 996 ), whether the interpretation “has been applied consistently and for a long period of time,” “the extent to which the agency engaged in a process of reasoned elaboration in formulating its interpretation,” and “the nature of the process through which the agency arrived at its interpretation[.]” Id. at 17 , 733 A.2d 996 (quoting Baltimore Gas & Elec.

Co. v. Pub. Serv. Comm’n, 305 Md. at 161-62 , 501 A.2d 1307 ) (quotation marks omitted). ⁵⁰² OPC urges this Court to grant little or no weight to the Commission’s interpretation of PUA § 4—210(d)(3)(ii), because these proceedings presented the Commission with its “first opportunity” (Wallace H. Campbell & Co., Inc. v. Maryland Comm’n on Human Relations, 202 Md.App. 650, 671 , 33 A.3d 1042 (2011)) to construe the newly enacted statute. Although this 2014 interpretation of the 2013 law had not yet been applied consistently over a long period of time, other relevant considerations indicate that the Commission’s interpretation deserves deference.

OPC asserts that the Commission provided “little (if any) elaboration in formulating its interpretation.” According to OPC, “the Commission’s discussion and interpretation — in its entirety — of ... PUA § 4-210(d)(3)(ii)” consists of a single paragraph. We disagree that the Commission’s analysis was so limited. Earlier portions of the opinion extensively discussed competing interpretations of the provision offered by the parties.

The opinion included analysis of section 4-210 in its entirety, from which the Commission drew inferences regarding how the legislature intended to motivate gas companies to accelerate infrastructure replacements. The opinion later cited subparagraph (d)(3)(h) to support the conclusion that “estimated project costs may not be recovered by the surcharge until BGE has begun making its initial STRIDE replacements[.]” As a whole, the well-considered opinion provided a reasoned elaboration of this provision within its statutory context. Further examination of the record reveals that the adversarial presentation of this issue sharpened the Commission’s statutory analysis. In addition to written testimony regarding the meaning of the subparagraph, one of the commissioners examined OPC’s witness, Dr. Pavlovic, regarding OPC’s preferred interpretation.

OPC’s expert testified that the statute’s reference to the “time” when a gas company makes a replacement could refer to a number of things, including “when the underlying asset is in the process of being put in the ground” or “not until ... the asset is in the ground and functioning.” He opined that the Commission should equate ⁵⁰³ the time the eligible infrastructure replacement “is made” with the time that the replacement has been “placed in service.” The commissioner asked Dr. Pavlovic to explain why the statute would refer to the recovery of “estimated” costs if the gas company could not collect the costs until the replacement had been “placed in service,” when the actual costs would already be known. Dr. Pavlovic commented that the reference to a cost estimate amounted to “an inconsistency or ambiguity as it were in the legislation.” He encouraged the Commission to use its own expertise where the statute was “unclear” and to resolve the question by applying principles of the conventional recovery model. The commissioner, by contrast, expressed doubt that there would be any need for the new statute if the traditional cost-recovery principles continued to apply: [COMMISSIONER:] But coming back to your testimony, you would have liked the statute to have said placed in service before cost could be recovered? DR.

PAVLOVIC: I would like the statute to have said placed in service, recovery — this provision is talking about the recovery. Recovery will begin when the asset is placed in service. [COMMISSIONER:] I know you’re not a lawyer, but a lot of your testimony deals with your view of the statute---That’s why I’m trying to clarify in my mind, if the statute wanted to say placed in service, it could have easily said placed in service. That’s a pretty common phrase in utility regulation; is it not? DR.

PAVLOVIC: Yes. [COMMISSIONER:] Are you familiar at all with the concept that if somebody thinks part of the statute is ambiguous, that you have to try to read the statute as a whole so that no terms are rendered meaningless or incorrect? DR. PAVLOVIC: Yes. [COMMISSIONER:] So if we took your reading of the statute that the recovery only occurs after the asset is ⁵⁰⁴ placed in service, what do we do with the estimated budget cost of that same subsection of the statute? After reading the language once more, Dr. Pavlovic commented, “the statute, it’s difficult here.” He concluded his answer by saying: “I mean to square this provision with, as I said, what I understand to be the overall intent, which is to apply the traditional revenue requirement model to the recovery of this investment, but to — in a more timely manner, I can’t make these completely consistent and I certainly admit that.” Like the Commission’s written explanation of its decision, the hearing transcript demonstrates that the agency engaged in a thorough reasoning process in formulating its interpretation.

Normally, this Court owes deference when an agency has “carefully considered the statutory language during an adversarial adjudicatory proceeding and issued [a] formal, written opinion [ ] that detail[s] the reasons for reaching its conclusion,” as long as the agency’s interpretation does not clearly violate the wording of the statute. Injured Workers’ Ins. Fund v. Subsequent Injury Fund, 222 Md.App. 347 , 357 n. 7, 112 A.3d 1092 (concluding that this Court normally would defer to an interpretation expressed by the Workers’ Compensation Commission in written opinion after adversarial hearing, but ultimately holding that the relevant language unambiguously supported the agency’s interpretation), cert. granted, 443 Md. 234 , 112 A.3d 1092 (2015). Giving weight to the Commission’s interpretation would be particularly appropriate here where even OPC, the party challenging the Commission’s interpretation, advanced the position that the statute was ambiguous and encouraged the agency to use its expertise to determine the meaning of potentially ambiguous terms.

See Baltimore Gas & Elec. Co. v. Pub. Serv. Comm’n, 305 Md. at 159 , 501 A.2d 1307 (stating that the presence of a vague term susceptible to more than one interpretation “in an administrative statute such as the Public Service.

Commission Law suggests that the General Assembly intended to entrust the formulation of specific stan ⁵⁰⁵ dards to the technical expertise of those charged with enforcing the statute”). As compared to this Court, the Commission certainly possesses far greater expertise in deciding how to accomplish the legislative purpose of accelerating infrastructure improvements through a surcharge. We are unconvinced that the Commission’s interpretation carries minimal or no authoritative weight. Because the Commission has “clearly demonstrate^] that it has focused its attention on the statutory provisions in question, thoroughly addressed the relevant issues, and reached its interpretation through a sound reasoning process,” its interpretation should “be accorded the persuasiveness due a well-considered opinion of an expert body.” Office of People’s Counsel v. Maryland Pub.

Serv. Comm’n, 355 Md. at 17 , 733 A.2d 996 (quoting Baltimore Gas & Elec. Co. v. Pub. Serv.

Comm’n, 305 Md. at 161-62 , 501 A.2d 1307 ) (quotation marks omitted). As explained below, however, even upon a plenary review of this issue, we would arrive at the same answer as the Commission. B. Meaning of Section 4-210(d)(3)(ii) of the Public Utilities Article When interpreting a provision of the Public Utilities Article, as with any other statute, we first examine the ordinary meaning of the enacted language, “reading the statute as a whole to ensure that no word, clause, sentence or phrase is rendered surplusage, superfluous, meaningless or nugatory.” Peters v. Early Healthcare Giver, Inc., 439 Md. 646, 665 , 97 A.3d 621 (2014) (quoting Nichols v. Suiter, 435 Md. 324, 339 , 78 A.3d 344 (2013)) (quotation marks omitted). A court may neither add nor subtract words to alter the meaning of statutory terms and must avoid forced or subtle constructions that limit or extend a statute’s application.

See, e.g., Clipper Windpower, Inc. v. Sprenger, 399 Md. 539, 553 , 924 A.2d 1160 (2007). “In every case, the statute must be given a reasonable interpretation, not one that is absurd, illogical, or incompatible with common sense.” Espina v. Jackson, 442 Md. 311, 322 , 112 A.3d 442 (2015) (citations ⁵⁰⁶ omitted); Lockshin v. Semsker, 412 Md. 257, 276 , 987 A.2d 18 (2010). OPC contends that the Commission violated these principles by “improperly substitut[ing] its own preferred words, phrases, and tenses that the Commission believed the General Assembly should have chosen.” OPC highlights some differences between the words of PUA § 4—210(d)(3)(ii) (“estimated project costs ... are collectible at the same time the eligible infrastructure replacement is made”) and words from the conclusion stated in the opinion: “The statute authorizes contemporaneous cost recovery at the time eligible infrastructure replacement work is being performed.” According to OPC, the Commission “rewrote” the provision to say that “estimated project costs ... are collectible at the time the eligible infrastructure replacement work, including preconstruction planning, has begun or is being performed.” 6 But even as it criticizes the Commission for rewriting (or, more precisely, paraphrasing) the statutory language, OPC then goes on to offer its own paraphrase of PUA § 4-210(d)(3)(ii). According to OPC, subparagraph (d)(3)(ii) means that “STRIDE Project costs may not be collected from residential ratepayers in the STRIDE surcharge until (and unless) each STRIDE project for which ratepayers are being charged has been ‘made,’ or completed.” (Emphasis added.) OPC’s analysis focuses most acutely upon a single word— “made.” OPC asserts that “the verb ‘made’ ” was “used in its simple past tense.” Citing online dictionaries, OPC tells us: “ ‘Made’ means ‘built, formed, or shaped in a particular way.’ ... Further, ‘made is the ‘simple past tense and past partici- ⁵⁰⁷ pie of ‘make,’ which means that it refers to something that has already been ‘built, formed or shaped in a specified way.” 7 OPC’s parsing of the sentence is flawed.

An example of the verb “to make” used in the “simple past tense” is: “The gas company made a replacement.” Subparagraph (d)(3)(ii), however, does not employ that formulation. Instead, the subpara-graph uses the word “made” as a participle along with the present tense verb “is” — the estimated costs become collectible at the same time the replacement “is made.” In other words, subparagraph (d)(3)(ii) uses the verb “to make” in the present tense, but in the passive voice. A simplified example of that passive formulation is: “The replacement is made by the gas company.” The active-voice equivalent of that sentence is: “The gas company makes the replacement,” using the present tense. Translated from the passive to the active voice, the meaning of “at the same time the eligible infrastructure replacement is made ” is substantially similar to “at the same time the gas company makes the eligible infrastructure replacement.” OPC’s interpretation might be accurate if the statutory language had employed the passive voice and the present perfect tense, so that it provided that estimated project costs become collectible at the same time “the eligible infrastructure replacement has been made.” That reading, however, would not reflect the language as actually enacted, in the passive voice and present tense.

Our ultimate question of interpretation is to determine when the “estimated project costs ... are collectible[.]” PUA § 4-210(d)(3)(ii). The statute directs that those estimated costs may be collected “at the same the eligible infrastructure replacement is