Hot, Cold and Fair Competition

March 11, 1994

The state Senate has rightly killed legislation to restrict Baltimore Gas & Electric Co. in selling heating and cooling equipment, appliances and service contracts. The bills, pushed by other sellers of such products and services, were another example of the General Assembly being forced to take sides in fights between commercial competitors.

Decisions on competition (and unfair subsidization by utility customers of nonregulated BG&E enterprises) should remain with the state's Public Service Commission, which has the experience and resources to deal with the issue -- without interference from the legislature.

The PSC is now investigating the financial subsidies and links between BG&E's regulated public utility operations and its nonregulated appliance and services businesses.

One PSC-ordered study found that the regulated side provided $555,000 in services to BG&E's 11 appliance stores in 1992. But critics argue that there are other supports and indirect costs paid by the utility side.

One such advantage is the list of 1 million customers and their payment records that has been compiled by the public utility. It is not available to any competitor. Another intangible advantage supplied by the regulated side (and supported by ratepayers) is the 24-hour switchboard, maintained as a public safety service, which could channel callers to the separate unregulated branch.

Across the nation, regulated utilities are diversifying and expanding their nonregulated businesses to increase income and protect against encroachment of independent power companies. BG&E already has stakes in a nursing home, office )) buildings, telecommunications system and golf course.

The PSC investigation began as BG&E aggressively moved into sales and services of heating and cooling equipment, which is more closely interwoven with regulated sales of energy.

BG&E wants them to be free of PSC oversight. The dispute is over how much the unregulated businesses should pay to the utility (and ratepayers) for supports and subsidies. These advantages should be fully valued at separation; future supports for BG&E's nonregulated entities should be eliminated. The increased competition, though, will be in the best interest of all consumers.

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