2 bills to limit utilities' side businesses rejected

March 03, 1994|By John W. Frece | John W. Frece,Sun Staff Writer Sun staff writer Ross Hetrick contributed to this article.

A state Senate committee defeated yesterday a pair of bills that would have restricted the ability of Baltimore Gas and Electric Co. and other utilities to run nonregulated businesses, such as heating and air-conditioning services or appliance stores.

The Finance Committee voted 8-3 against the bills, which had been pushed by a coalition of heating and air-conditioning contractors and appliance dealers who maintained that utilities such as BG&E subsidize their side businesses with money raised from ratepayers for basic service. That, the coalition contended, gives the utilities an unfair competitive advantage.

The bills would have required the state Public Service Commission to submit those side businesses to the same regulatory scrutiny that applies to basic utility services.

Last fall, an independent study by accounting firm Ernst & Young found that more than a half-million dollars of ratepayers' money was used to subsidize BG&E's retail appliance and electronics business.

Sen. Thomas P. O'Reilly, the Prince George's County Democrat who chairs the committee, was one of the three members who voted for the bills.

"I have no problem with BG&E being in the business, trading on its good name," he said. "What concerns me is whether the ratepayer is subsidizing it." Mr. O'Reilly said the Public Service Commission has agreed to review the issue.

"It's definitely a slap in the face to small businessmen in Maryland," said Larry L. LeDoyen, chairman of the Maryland Alliance for Fair Competition. But he noted that his group is pursuing a similar case before the PSC.

"Obviously, we think they made the right move," said BG&E spokesman Arthur J. Slusark. "We've said all along [the bills] were not needed and were designed to help a special interest group create unfair barriers that would hurt Maryland consumers," Mr. Slusark said.

One of the bills, sponsored by Sen. Patricia R. Sher, D-Montgomery, would have subjected such side businesses to the same sort of PSC scrutiny that applies to the utilities' regulated services.

The other bill, sponsored by Sen. John A. Pica Jr. and Sen. Barbara A. Hoffman, both Baltimore Democrats, would have directed the PSC to regulate how the gas and electric companies award contracts.

It also would have prohibited them from engaging in certain "anti-competitive practices," such as including the costs or expenses of nonutility businesses in basic utility rates or charges.

In addition, the bill would have required gas and electric companies to treat all nonregulated affiliates as if they were independent businesses, and that such transactions be audited annually by an independent firm picked by the PSC.

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