PSC staff offers utility proposal BG&E would get $98 million increase

September 20, 1990|By Ross Hetrick | Ross Hetrick,Evening Sun Staff

Concerned about possible damage to Baltimore Gas & Electric Co.'s ability to borrow money, the staff of the Public Service Commission is recommending that the utility's customers shoulder part of the cost of the shutdown Calvert Cliffs nuclear power plant.

The PSC staff, which participates in cases before the five-member Public Service Commission, contends that BG&E should receive a rate increase of $98.4 million. The utility wants a $194 million increase.

BG&E requested the 12 percent rate increase -- the largest in its history -- in May to pay for renovations at its troubled Calvert Cliffs nuclear plant, construction of a new coal-fired plant and financing the purchase of power from other utilities.

In response to the filings in the case, a BG&E spokesman said the company's request is "just and reasonable" and the need for the increase is "demonstrated in our testimony."

Much of the case centers on the troubled Calvert Cliffs plant, which has been shut down since May 1989, except for a nine-day period in April when the Unit 1 reactor was operating. The plant was originally shut down because of leaks in the pressurizer in Unit 2. Since then various safety reviews have been conducted at the plant.

About $21 million of the increase stems from financing charges that BG&E had to pay to replace the power that Calvert Cliffs was not generating. In normal times, Calvert Cliffs provides about half of BG&E's electricity.

In testimony filed this week, the PSC staff said that if this cost is not passed on to the consumer, it would cause cash flow problems for BG&E and possibly hurt its credit rating. "A denial of recovery of financing costs may send negative signals to the investment community, which could conceivably result in a higher cost of capital," said testimony presented by David L. Valcarenghi, a public utility auditor for the PSC staff.

If the PSC decides in the future that the company should bear some of the costs of the replacement power, along with the financing charge, money can be refunded to the customers in the form of credits to customer bills, Valcarenghi said.

The staff also did not object to BG&E's request for $63 million for increased operating and maintenance costs at the Calvert Cliffs plant.

In contrast, Maryland People's Counsel John M. Glynn has objected to inclusion of both the increased operating and maintenance costs for Calvert Cliffs and the financing charges for the replacement power.

Glynn filed a proposal earlier this week that calls for cutting BG&E's rate increase to only $10.5 million. The People's Counsel is the state official who represents residential customers before the PSC.

Glynn contended that BG&E should bear most of the responsibility for the shutdown of Calvert Cliffs, which has been on the Nuclear Regulatory Commission's "watch list" of troubled plants.

The PSC staff and Glynn agree that BG&E should not be paid for the construction of the Brandon Shore plant's No. 2 coal unit before it opens in late 1991. Instead, they said the power plant should be completed before rate adjustments are made.

Likewise, the PSC staff and Glynn both oppose the company's request to change the method of calculating the value of its property, plant and equipment, which would boost rates. The formal hearing before the commission is scheduled to resume Oct. 3 and continue until Oct. 5, Glynn said.

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