PSC's Poor Split Decision

November 08, 1993

The Maryland Public Service Commission's recent decision to charge customers for a 1989 breakdown of Baltimore Gas & Electric Co.'s Crane power plant suggests that it is more understanding of utilities' excuses than of consumer interests.

The money involved in this case is small, less than $1 for each customer. The implications of the decision, however, could mean significant charges for consumers in future PSC verdicts.

The commission, and its hearing examiner, found BG&E "management action" was responsible for the three-month outage of the Crane generator. The chief "extenuating circumstances" cited by the PSC were that the utility bought a faulty computer program, which failed to alert plant operators to overheating of the rotor.

That seems to be a mistake that should be borne by the utility. The PSC, rejecting the decision of the hearing examiner, said customers should pick up a quarter of the costs.

The commission's rationale seems to be that "everyone makes mistakes" instead of assigning financial responsibility for those mistakes. It reflects a comfortable "getting along" attitude toward regulated utilities that may be symptomatic of a regulatory body whose members have been there a long time. Two of the five PSC members have served more than a decade, another nearly nine years, a longevity rare on other states'

panels.

The split-the-costs approach may work in rate-setting cases, where the panel weighs voluminous conflicting data. But the decision on the Crane outage appears to establish a no-fault basis for the Maryland commission to shift some company-caused costs to the bills of ratepayers.

The big question for BG&E customers is whether this shared-responsibility pattern will be applied in the PSC's upcoming decision on the $500 million, two-year shutdown of the Calvert Cliffs nuclear plant. The issues there, involving federal intervention, are more complex than at the Crane plant, but there concern that the PSC's decision on Crane could set a precedent.

Regulatory agencies in other states have taken a tougher stand in holding utility management (and owners) responsible for the consequences of their decisions, particularly regarding nuclear plant operations. The Maryland commission should make paramount its public service obligation in deciding who should pay for faulty operational decisions.

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