BGE kicked out of trade group Contractors upset that utility invaded their turf

October 30, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

When it comes to the Associated Heating & Air Conditioning Contractors of Maryland, the Baltimore Gas and Electric Co. isn't welcome anymore.

Upset that the $8.1 billion utility created an appliance repair and sales subsidiary and invaded their turf, the board of the contractors' group last week voted to eject BGE as an associate member.

In terminating their membership, AHACC expressed the opinion that BGE had "operated certain aspects of its business unethically," did not work in the best interest of the group and engaged in "unfair competition."

"BGE has never operated unethically. That charge is just completely untrue," said Larry Shannahan, BGE's director of telemarketing and field services, and the utility's representative to AHACC. "Yes, we're going to compete with them, but we've always been and will be above board."

BGE, which had been a member of the group for more than 20 years, claims to have provided contractors with more than $100 million worth of business. AHACC, chartered in 1970, has over 100 members.

Stephen F. Wood, BGE's vice president of sales and marketing, argued during an AHACC board meeting held last week at the Rose Restaurant, in Linthicum, that it should remain a member.

But the argument was to no avail. AHACC's board voted 12-0 (with two abstentions) to kick BGE out of their clubhouse.

"I think it was entirely appropriate," said Larry L. DeDoyen, an JTC AHACC board member and executive director of the Maryland Alliance for Fair Competition Inc., an AHACC splinter group and BGE gadfly.

"I think the board did this to show its frustration over what BGE is doing to small contractors."

The AHACC board's vote marks the latest battle in the escalating war between BGE and mainly small heating and air conditioning repair contractors dating to at least July 1994, when the company created its Home Products & Services Inc. subsidiary.

The contractors claim HP&S -- and Maryland Environmental Services Inc., a company HP&S acquired -- unfairly competes against them, because it can use the BGE name and because it has access to BGE's large advertising budget.

The Maryland Alliance even demanded that the state's Public Service Commission force BGE to pay a 2 percent royalty to ratepayers for unfairly supporting the subsidiary.

The PSC rejected the alliance's position in August, ruling HP&S was not supported by revenues from power generation or transmission.

Although BGE declines to reveal HP&S' earnings, 31 percent of its estimated $60 million in annual sales is devoted to appliance repair. HP&S also operates 10 retail outlets in the area, which sell appliances and electronics.

"Our customers asked us to provide this service," said Sharon S. Hostetter, who last week was named vice president of sales and marketing, when Mr. Wood was promoted to head yet another new subsidiary.

"I'm disappointed that this wasn't handled professionally, and I hope that it won't affect our relationships with independent contractors."

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