Utilities are hot over steam BGE wants a share of downtown market

November 16, 1995|By Robert Guy Matthews | Robert Guy Matthews,SUN STAFF

To most, it's just steam billowing out of pipes below the steel grates downtown. To two Baltimore energy companies, it's a cloud made of money.

Baltimore Gas and Electric Co. and Trigen-Baltimore Energy Corp. say profits are to be made from the steam system that provides heat to downtown buildings. For a decade, Trigen has commanded the steam market. Today, BGE wants to get in on the action.

And therein lies a tussle that has each charging the other with monopoly, unfair competition and schoolyard-style bullying.

Trigen says it fears it will be run out of business. BGE says Trigen wants to keep out competition.

For now, Trigen is on the losing side. After stalling BGE for a month, a critical planning commission vote last week recommended that BGE be given the right to provide steam and hot water heat.

But BGE could lose its advantage during a City Council public hearing at 5:30 p.m. today because of intense lobbying by Trigen.

"All we're asking for is an opportunity to compete in this arena," said Stephen F. Wood, President and CEO of Energy Project and Services, a BGE subsidiary.

BGE, an $8.1 billion utility company, plans to woo with lower rates only Trigen's largest customers, like University of Maryland at Baltimore and Mercy Medical Center. Mr. Wood said the company would not go after Trigen's smaller, less profitable customers.

The BGE plan "is a direct threat to our existence," said Lawrence A. LaMotte, a Trigen business development consultant. "The question is, will there be any other company to deal with other than BGE" after it does what it proposes to do, he said.

Trigen, a subsidiary of Trigen Energy Corp., which provides steam heat in 12 other cities and has assets of $16 billion, says that among its 300 downtown customers, 50 percent of the profit margin comes from the top 25. It says that if it loses its most profitable customers, it will be forced to charge more from the remaining customers to cover the cost of their system.

Also, Trigen is saddled with the maintenance cost of 17 miles of pipe webbed under the city. BGE's heating plan requires far fewer pipes because its boilers would be built near the buildings that it serves, lowering maintenance costs.

"If I go in and offer their customers a lower price, there is nothing to stop them from doing the same," Mr. Wood said.

Trigen officials also say that because the Public Service Commission regulates steam rates and not hot water rates, BGE's ability to undercut Trigen's prices constitutes an uneven playing field.

"That is a formula for unfair competition," said James J. Abromitis, president of Trigen.

The accusations all began in mid-October when Trigen first got wind that BGE was poised to enter the steam market. BGE introduced a bill in City Council asking permission to build a $50 million chilled water and heating system for downtown office buildings under the name Comfort Link.

Trigen launched a successful pre-emptive strike three days after the bill was introduced by having a planning commission hearing postponed.

But as several downtown organizations backed the BGE effort, including the Greater Baltimore Committee, the Baltimore City Chamber of Commerce and the Downtown Partnership of Baltimore, Trigen began to lose ground.

The company has turned to trying to persuade the City Council to stop BGE.

Trigen wants an independent study of the economic impact of the BGE system. Meanwhile, company officials are asking the City Council to shrink the area in which BGE can operate its chilled water plant downtown in addition to striking its heating plans.

"There is a big hidden agenda here," Mr. Wood said. "The agenda is to block us so that we can't compete in the energy market downtown, block us from competing in other parts of the city."

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