BG&E gets approval to raise rates Residential bills will increase $2.96

December 18, 1990|By Kim Clark

The effective date of Baltimore Gas and Electric Co.'s rate increases was incorrectly reported in yesterday's Sun. The Public Service Commission ruled that the initial increases -- 4.5 percent for businesses and 5.7 percent for residential customers -- should take effect immediately.

State regulators gave the Baltimore Gas & Electric Co. its largest rate increase in history yesterday, ordering the utility to raise its rates by $77 million, or 4.7 percent, in January, and another $72 million, or 4.4 percent, in June.

To help BG&E improve its earnings and recoup the costs of several improvements to its power generating system, including repairs to its troubled Calvert Cliffs nuclear power plant, the Public Service Commission ordered that residential customers will start paying an average of $2.96 more on their monthly bills, starting Jan. 1.

FOR THE RECORD - CORRECTION

Because the state regulators found that businesses had paid more than their fair share of rate increases in the past, they ordered that the Jan. 1 increase in power rates for business customers reach only about 4.5 percent, while residential rates would jump 5.7 percent.

And sometime in June there will probably be another similar rate increase, the panel declared.

Once BG&E starts generating power from its generator under construction at the Brandon Shores plant in northern Anne Arundel County, the commission will decide whether to go ahead with a plan to raise rates another $72 million to cover that facility's costs.

The PSC has given initial approval to the plan to raise BG&E's bills another 4 percent to 5 percent in June. But the final decision on the plan -- which would raise residential customers' average monthly bills another $3 or so -- will be decided in a brief hearing next spring.

Though consumer representatives won many of the issues in the case, including a small reduction in BG&E's allowable rate of return, consumer and business representatives said they were disappointed by the decision.

The commission rejected BG&E's request to recover $21 million in interest on the money it has used to buy replacement power for the shut down Calvert Cliffs plant and it also said stockholders, not customers, should pay for about $3.3 million -- worth of repairs to the Lusby generating station, which has been tTC shut down for most of the last 20 months.

But People's Counsel John Glynn complained that much of the initial increase -- about $41 million -- would still go toward improvements to the utility's only nuclear power plant.

The state is not supposed to allow utilities to charge customers for costs deemed "imprudent," and BG&E is being allowed to pass through most of its repair costs for Calvert Cliffs even though the federal government has criticized the utility for lax management of the plant in Lusby, Mr. Glynn said.

"This is depressing," said Mr. Glynn, who is the attorney appointed by the governor to represent consumers' interests in utility matters. "On some issues the commission found actual mismanagement and imprudence, but customers are still being asked to pay most of the bill."

BG&E spokesman Arthur Slusark said the company was pleased with parts of the decision, especially the initial approval of a rate increase to cover the addition to Brandon Shores, but was concerned about the small disallowance of some repairs to Calvert Cliffs.

The items that the commission said stockholders, not customers, should pay for "were mostly safety improvements," that should be paid for by customers, Mr. Slusark said.

Though the decision gave BG&E all but about $70 million of the $282 million the company had originally asked for, investors also seemed disappointed by yesterday's decision.

BG&E's stock, which has fared poorly since the troubles with its only nuclear power plant surfaced early last year, closed down 75 cents at $27.625 in New York Stock Exchange trading after the decision was released yesterday.

"Investors aren't happy," said Greg Enholm, who follows BG&E's stock for customers of the Salomon Bros. investment firm in New York.

"The decision was moderately favorable for the company, but it was less than what the company wanted and less than investors expected," Mr. Enholm said.

Mr. Enholm said he and investors were concerned that the commission's ruling might mean the five-member panel is taking a tougher stand on nuclear costs at a time when BG&E is fighting for several hundred million dollars more in nuclear-related rate increases.

Sometime in 1992, the PSC is set to decide whether to allow BG&E to pass on to customers the approximately $350 million the utility has spent buying replacement power to light Maryland while its biggest generating plant has been closed.

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