Deep Creek Lake, a Md. landmark, is up for sale Utility that owns it acknowledges shore could be exploited

Few covenants protect it

Large freshwater lake is major attraction for Western Maryland

March 01, 1998|By Kevin L. McQuaid and Mary Maushard | Kevin L. McQuaid and Mary Maushard,SUN STAFF Contributing writer Cindy Stacey supplied information for this article.

Deep Creek Lake, the top tourist attraction and a major economic engine in Western Maryland, is for sale -- a fact that is causing anxiety and fear among residents and users of the huge lake.

GPU Inc., a Reading, Pa. utility, owns both the lake's hydroelectric plant and the lake's bottom and shoreline. Its planned sale of both leaves Western Marylanders wondering if a new owner might develop the 4,500-acre, man-made lake's pristine shore, charge higher user fees or somehow change the way the lake has been operated since 1923, when GPU's forebears built the plant.

"We know the lake is going to change hands. It's going to bring change, and human beings, being what they are, get very nervous about change," said Gerald Polanski, president of the Deep Creek Homeowners Association.

Few people know that a power company -- and not Maryland -- has controlled Deep Creek Lake for the last 75 years. GPU pays the Maryland Department of Natural Resources a fee to manage the lake, and it has a separate 12-year, water-use permit with the state that expires in seven years.

The lake's sale follows the economic trend caused by the federal government's deregulation of the power industry to encourage competition among utilities.

The trend is forcing smaller power generating utilities such as GPU to divest itself of power plants to concentrate on other aspects of its business.

GPU officials said they have not determined the value of the plant or the lake, and will let the open market decide how much the property is worth.

"The process is just beginning and no one is panicking at this point," said David Moe, co-president of the Garrett County Chamber of Commerce.

"But people are genuinely nervous about it because it's an unknown."

Deep Creek Lake, a three-hour drive from Baltimore, is visited by thousands of people a year for skiing, snowmobiling, boating, fishing, swimming and other activities.

While Maryland owns the water in the lake, GPU owns an undeveloped 100-foot buffer along much of the shore.

Residents' fears of what a new owner might do at Deep Creek are justified.

While operating agreements are in place between GPU and DNR, the covenants do not restrict development of the buffer or other land surrounding the lake, according to GPU officials.

While GPU voluntarily did not attempt to develop the property, a new owner might.

Similarly, a new owner might raise fees for docking boats or other recreational facilities, a right GPU also had under an operating agreement with the state that expires in 2003. The agreement becomes void when the plant and lake are sold.

Under the agreement with the state, GPU collects in excess of $500,000 a year in fees for recreational access to Deep Creek Lake, said Larry O'Reilly, a GPU spokesman. The state, in turn, receives a percentage for managing the lake.

But in its agreement, GPU has the ability -- rarely exercised -- to increase the fees, said O'Reilly.

"Our philosophy has always been that the buffer is necessary to accommodate the rise and fall of the water," said the GPU spokesman. "I wouldn't speculate on what a new owner's philosophy might be."

Maryland officials say they hope to maintain the status quo, regardless of who owns the lake, and contend that a new owner wouldn't be able to alter the land that surrounds the water.

"Our goal is to maintain the current situation, and we will take steps to ensure that that remains a certainty," said Liz Kalinowski, a DNR spokeswoman.

"It's just too early to tell what will happen."

GPU is selling its Deep Creek hydroelectric plant along with 30 other generating facilities because of significant changes under way in the once-staid energy industry.

Thanks to federal efforts to encourage competition and deregulation, companies such as GPU are shedding power plants to focus solely on other, less capital intensive aspects of the energy business.

"We're not large enough in the area of power generation to be successful going forward," said Ron Morano, a GPU spokesman. "So our strategy is we're going to focus on the distribution side of the business."

Earlier this month, the utility and a New York power company announced plans to sell a jointly owned plant near Pittsburgh that produces enough electricity to light 1.8 million homes. The plant is expected to sell for more than $570 million.

The recent decision to sell Deep Creek Lake isn't the first time Western Marylanders have pondered a change in the lake's ownership.

In late 1995, for instance, a group of Western Maryland residents considered buying it from GPU, but were unable to rally support for enabling legislation that would make a sale possible.

"You have a lot of interest now," said Sen. John J. Hafer, a Garrett County Republican.

"Because you have property owners, you have businesses that depend on the lake for their livelihoods, and property owners want stability."

Pub Date: 3/01/98

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