A Baltimore County Circuit Court judge is expected to decide Monday whether state regulators or the court should review Baltimore Gas and Electric Co.'s pending $3 billion merger with a Washington utility.
Judge James T. Smith Jr.'s decision could determine whether the merger between BGE and the Potomac Electric Power Co. reaches fruition. The two utilities have said that the merger could die if the court, rather than the state Public Service Commission, decides the case.
In an effort to further convince the judge, BGE and Pepco filed documents in Circuit Court earlier this week contending that state regulators committed a series of errors in determining the costs of the corporate marriage and the effects on company shareholders.
The filing by BGE and Pepco contends that the PSC failed to take $14 million in merger costs into account when reviewing the companies' application and when ordering a $56 million-a-year rate reduction.
At the same time, the utilities claim that the PSC made mistakes in calculating the rate effect of low-income and economic development programs and failed to allow the utilities to recoup hundreds of millions of dollars of purchased energy costs that had been previously approved.
"We believe that what is before the judge is a case without merit," said Arthur J. Slusark, a BGE spokesman. "And we want to avoid a protracted court case on a PSC order that we say has philosophical and computational errors."
Despite the alleged errors, BGE and Pepco have stated repeatedly that the PSC is the proper jurisdiction for the case, because the PSC is intimately familiar with the merger application and because the agency has expertise in deciding utility matters.
BGE and Pepco attorneys told Judge Smith in a hearing July 8 that remanding the case to the PSC was "absolutely essential" for the merger to go forward.
BGE and Pepco contend that the errors need to be addressed before the PSC before -- or if -- the court decides the outcome of the case brought by the International Brotherhood of Electrical Workers' appeal.
"The errors they're presenting now are judgmental errors," said James Hunter, president of the IBEW's Local 1900, which represents Pepco employees. "It's a matter of how one interprets the PSC decision as to whether they are in fact really errors. They haven't, to my knowledge, presented any clear mathematical errors."
Although the PSC admitted earlier this month that it made a computational error that would reduce a proposed Constellation Energy Corp. rate decrease by $8.5 million a year, it could not be determined whether the PSC intends to seek further changes because of the BGE and Pepco filing.
"There will be no comment on the filing," said Chrys Wilson, a PSC spokeswoman. "This is a matter that will be left up to the courts."
It also could not be determined whether Judge Smith would take the new material into account. Earlier this month, the judge appeared to reject arguments made by BGE and Pepco counsel that the PSC's evaluation should be dramatically altered.
"You want to go back and challenge the model that the PSC presented," Judge Smith said, addressing the utilities' lawyers. "Quite frankly, that's not what we're here for."
Pub Date: 7/26/97
