BG&E gains tentative support Power plant plan backed by officials

October 30, 1991|By Kim Clark

Baltimore Gas and Electric Co.'s controversial plan to build additional generators at its Perryman station won a conditional endorsement from seven top state governmental officials yesterday.

The top state officials for the environment, agriculture, transportation, economic development, natural resources, energy and planning said that they favor BG&E's plan over a competitor's proposal to build a power plant in South Baltimore.

But the officials also said the competitor, Cogen Technologies Inc., ought to be given a better chance to beat BG&E's offer.

In a letter to Frank Heintz, head of the state agency that will decide whether a power plant will be built and who will build it, the officials also said the precedent-setting conflict between BG&E and Cogen Technologies might be overwhelming the traditional process for deciding how to meet Maryland's future energy needs.

The letter to the Public Service Commission isn't definitive, "but it carries a lot of weight," said Peter Dunbar, who heads the power plant review division of the Department of Natural Resources.

Mr. Dunbar said that the letter was part of the regular power plant review procedure, but Robert Egan, an economist with the Public Service Commission, said that this was the most detailed recommendation he had seen from the officials.

Indeed, nearly everyone involved in the regulatory battle between BG&E and Houston-based Cogen Technologies has said the case that is being reviewed by the Public Service Commission is one of the most complex, and most important, ever.

The winner will get a chance to build a power plant that will probably earn more than $2 billion in profits over the next 30 years.

And the outcome could decide the shape of the state's power industry for decades to come.

Until now, almost all the state's electricity has been generated by companies whose every move -- from profit margin to advertising cost -- has been overseen by the state government.

Citing a federal law that requires utilities to buy power if the price is cheaper than the utility's cost, Cogen Technologies is attempting to become the first major, unregulated, independent power producer in Maryland. If Cogen Technologies wins its fight to force BG&E to buy the power it wants to generate, other "cogenerators" may follow, and BG&E may, over the long term, shrink into a collection of transmission wires and billing services.

There are other precedents. Besides deciding whether or not the utility really needs to build a plant in the first place, the state's utility regulators are for the first time weighing all possible energy supply options.

In hearings this month, a PSC hearing examiner heard testimony from environmentalists arguing that BG&E could conserve enough energy to make an additional plant unnecessary and testimony from Cogen executives who said they could build a power plant cheaper than BG&E.

Cogen Technologies President Robert McNair said that his company wants to build a steam generator in South Baltimore, sell some of the steam to local chemical companies and use the rest to turn power generators. He said that Cogen Technologies could sell its power to BG&E for less than BG&E would have to charge its customers.

In their letter, however, the state officials said that they don't believe Cogen Technologies' most recent offer is cheaper than BG&E's plan.

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