BG&E gets OK for Harford County generator State senator intervened for independent power companies

June 26, 1993|By John W. Frece | John W. Frece,Staff Writer

State utility regulators have decided to let Baltimore Gas and Electric Co. build a $110 million electric power generator in Harford County despite the intervention of a powerful state senator.

Senate Finance Committee Chairman Thomas P. O'Reilly, a Prince George's Democrat, sided with independent power companies that had wanted to bid on the project.

Senator O'Reilly said he belatedly intervened in the 3-year-old case last month because he wanted to encourage competition in the production of electricity, which he said would mean lower electric bills for consumers.

But his unusual and unexpected involvement just as the five-member Public Service Commission was about to decide the case prompted Frank O. Heintz, the commission's usually reserved chairman, to accuse the senator of "an inappropriate attempt to unduly influence our deliberations."

Moreover, Mr. Heintz pointedly suggested in a May 28 letter to Mr. O'Reilly that the senator might have violated a law by trying to intervene, and said parts of the senator's letter to the commission "appear to have been written by certain parties" to the case.

Senator O'Reilly had accused the commission of making an "anti-competitive" decision by allowing BG&E to build a new 140 megawatt, gas-fired combustion turbine at its Perryman plant, which is located on a 719-acre site near Aberdeen Proving Ground.

Instead, he said, the commission should have let independent power producers bid to see if they could supply electricity more cheaply than it will cost BG&E to build the new turbine.

Citing what he called "the unassailable benefits to be derived from competition," Senator O'Reilly warned Mr. Heintz that if the commission did not reopen the case, his Finance Committee would hold its own hearings "so that the role of competition in BG&E's service territory can be clarified."

The senator also sought and immediately received written assurance from the legal counsel to the General Assembly that his intervention was appropriately within the scope of his legislative duties.

Senator O'Reilly acknowledged that in drafting his letters to the commission he leaned heavily on the expertise of independent power producers as well as that of John M. Glynn, who as People's Counsel to the commission represents utility ratepayers. Mr. Glynn had strongly urged the commission to allow the independent power producers to offer to sell BG&E electricity in lieu of building a new unit at Perryman.

The Perryman expansion is the first electric generation project that BG&E has begun since completing the Brandon Shores plant in Anne Arundel County in 1991. Electricity to be generated at Perryman would be used for "peak" needs, that is, on the hottest days of summer or coldest days of winter when electrical demand is highest.

Backed by changing federal energy policy that over the past decade has increasingly encouraged competition for a commodity once produced solely by electric utility monopolies, independent power producers now claim 8 percent of the nation's power generation market.

Independents include private, unregulated companies that build their own generating plants or "co-generate" electricity by piggybacking onto some other process, such as the making of steel or the incineration of trash.

Nancy H. Sutley, policy director for the National Independent Energy Producers, a trade association in Washington, said independents now produce about 47,000 megawatts of power, an amount roughly equivalent to about 50 large power plants. Competition, she estimates, probably saves consumers 5 percent to 15 percent on their rates, although she concedes there is little data available to back those numbers.

But the independents complain they have had difficulty breaking the grip large utilities have on the market, and they say utility regulators often are not much help.

Mr. O'Reilly said what stirred his interest was that the commission appeared to reverse itself merely at the request of BG&E. In May 1992, the commission directed BG&E to solicit competitive bids for the first phase of the Perryman expansion.

Requests rejected

But in March of this year -- after a letter from BG&E that said the utility could not get the complicated bid requests out fast enough -- the commission agreed to let the company build the first unit and then solicit bids for the second, still several years away.

Mr. Glynn, the People's Counsel, asked the commission to reconsider. So did an independent producer, Cogeneration Partners of America of Cherry Hill, N.J., and a trade group, Mid-Atlantic Independent Power Producers, based in Chadds Ford, Pa. The trade group sent copies of Mr. Glynn's pleading to Senator O'Reilly, who intervened by letter May 18.

But the commission rejected those requests June 10, clearing the way for construction at Perryman as early as this fall, absent some other legal challenge.

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