PSC delays power order Plan to end monopoly of 6 electrical utilities is put off until 2002

Regulators cite complexity

Pilot program covering third of residents to go into effect in 2000

January 01, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Bowing to pressure from legislators and the People's Counsel, state regulators yesterday delayed until July 2002 historic changes that will open Maryland's monopolistic electric supply system to competition.

The Maryland Public Service Commission cited the "numerous complicated issues" involved in deregulating the century-old power system for all state residents and businesses.

The PSC had planned to offer choices to consumers statewide by April 2001 in the hope that competition and deregulation would ultimately foster lower energy prices.

"The commission can see that the magnitude and complexity of the issues presented for decision in [the 1997 electric restructuring order] will raise new questions and requests by parties for clarifications, additional guidance and changes in policies," the PSC wrote in its order.

Among issues likely to be addressed are so-called "stranded costs" of obsolete power plants, consumer protections, billing changes and the dependability of electrical power sources in a competitive environment.

The PSC also cited a motion to reconsider the restructuring order filed Dec. 19 by the state Office of People's Counsel as a primary reason for the revised timetable. The People's Counsel represents residential and noncommercial utility customers before the commission.

In addition to seeking guidance and more time to consider the ramifications of competition in the market place, the People's Counsel challenged the PSC's authority to implement its own order and suggested that the Maryland General Assembly would first have to pass new tax and other laws before competition could be introduced.

"We did it because we think there are a lot of unresolved issues that need to be worked out, and we don't think the time frame is acceptable to resolve those issues," said People's Counsel Michael J. Travieso.

"I don't believe the delay will hurt residential customers because I don't believe that there will be significant savings," Travieso said.

"No one, in fact, is pledging that prices will go down immediately or all that much. Hopefully, now we can get in place some consumer protections and provisions that allow the commission to regulate any new businesses that come into the state."

The 15-month delay comes less than a month after lawmakers blasted the PSC's 202- page restructuring order, issued Dec. 3, as "incomplete and insufficient."

Sen. Robert R. Neall, a Republican from Anne Arundel County, derided the PSC plan for failing to provide recommendations for tax changes that would be required.

He also complained that the PSC's timetable -- creating a pilot program offering a choice to a third of Maryland residents in 1999 -- was unrealistic and did not give legislators enough time to pass new laws before the program began.

Under the PSC's revised timetable, a pilot program won't be implemented until July 2000.

Neither Neall nor PSC Chairman H. Russell Frisby Jr. returned telephone calls for comment on the revised timetable yesterday.

The state's six utilities supported the PSC's delay, according to a statement by the Baltimore Gas and Electric Co., the Potomac Electric Power Co., Allegheny Power Co., Delmarva Power & Light Co., the Southern Maryland Electric Cooperative and the Choptank Electric Cooperative.

"Electric restructuring is a very complex issue that needs to be done right the first time," said Christian H. Poindexter, BGE's chairman and chief executive officer, together with the heads of the five other utilities.

"This move by the PSC affords all parties involved in the process the time they need to achieve that goal. It should also allow the Maryland General Assembly the time it needs to consider the legislation needed to make customer choice a reality and a benefit for all Marylanders."

BGE exclusively provides electricity to more than 1 million customers in Central Maryland.

Utility industry analysts also praised the move for its decisiveness.

"It's one clean sweep," said Ronald S. Tanner, a Legg Mason Wood Walker Inc. analyst. "We envisioned that there would be delays, but that they would come piecemeal. So this is good."

Pub Date: 1/01/98

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