Potomac Edison customers in Montgomery County face two financial pressures from opposite directions: the state owes the utility $280 million, and the utility wants to raise their bills.

The Supreme Court of Maryland ruled in July that the state overcharged Potomac Edison on electricity production. The Board of Revenue Estimates' September report, released Thursday, Sept. 24, pegged the one-time refund at $280 million and the ongoing annual revenue loss at about $15 million. Together with other factors, the hit drags the state's general fund outlook down by 0.9% compared to fiscal 2026, even after the board added $319.9 million to its overall forecast, bringing the fiscal 2027 total to $27.44 billion.

Separately, Potomac Edison filed a $52.8 million rate increase request on Sept. 4 that would raise the average residential bill by about 5.3%. The Maryland Public Service Commission was still reviewing that proposal as of Sept. 16, Bethesda Magazine reported. Potomac Edison, a subsidiary of FirstEnergy Corp., serves roughly 295,000 customers across seven Maryland counties, including Montgomery.

The refund flows from the state treasury to the utility. Whether any of that money reaches customers is not addressed in the court ruling or the revenue report. The rate hike, if approved, would flow the other direction.

Board of Revenue Estimates Director Robert Rehrmann said the year-over-year revenue dip does not signal a recession. He pointed to a cluster of one-time factors: the Potomac Edison refund, a $260 million estate tax payment in fiscal 2026 that will not repeat, volatile capital gains collections, and increased lottery distributions for capital projects.

"That, combined with some modest growth rates, is what ultimately ends up in a slight decline" compared to the prior year, Rehrmann said at the board's Sept. 24 meeting, as first reported by Maryland Matters.

A separate drag on state finances: the IT and Data tax, passed in 2025, collected only $100 million in its first full year against a $500 million projection by legislative analysts. The board also revised down future estimates for that tax.

Comptroller Brooke Lierman called the numbers "a mixed picture," saying revenues are stronger than expected but paycheck-related growth is slowing while prices keep rising.

The broader outlook adds pressure. The board projects fiscal 2028 general fund revenues of nearly $28.4 billion, a 3.3% increase that still falls short of the state's 4% trend growth rate. Budget Secretary Yaakov "Jake" Weissmann said the fiscal 2028 budget, due in January, must address a projected $3 billion structural gap. State agencies are already being asked to find cuts of roughly 3%, which will not fully close it.

No statement from Potomac Edison or FirstEnergy addressing the court-ordered refund has been made public. The Public Service Commission has not announced a decision timeline for the pending rate request; residents can file comments on rate cases through the commission's website at psc.state.md.us.