Electricity competition sought sooner General Assembly bill moves timetable up 2 years, to July 2000

'Lower cost for consumer'

Measure also would allow BGE to become a holding company


March 26, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Lawmakers in Annapolis are attempting to introduce competition among electricity suppliers by the middle of 2000, accelerating by two years a timetable they had endorsed less than three months ago.

If adopted, the July 2000 date to provide all Maryland consumers with a choice for electricity providers would largely ignore a schedule put forth by state utility regulators, who in December submitted a July 2002 plan for deregulation -- at the behest of legislators.

Senate President Thomas V. "Mike" Miller, an advocate of accelerating electric competition, said mandating the revised timetable is necessary.

"We have to make the people who are opposed to change accept that it's a reality," Miller said after a hearing on the issue. "This is a hammer to say that [utilities] have to face up to that reality."

Miller added, however, that the July 2000 date is "not a magic number. It's a goal."

The newly proposed schedule for deregulation is part of an amendment to a bill working its way through the General Assembly that would allow Baltimore Gas and Electric Co. to alter its corporate structure and become a utility holding company.

As a holding company, BGE says it would have greater financial flexibility and be better able to compete in a deregulated utility environment.

Opponents of the holding company bill -- including the state's Office of People's Counsel, the International Brotherhood of Electrical Workers and a business coalition known as the Alliance for Fair Competition -- fear that the structure would allow BGE to circumvent state regulators' authority.

"We're not opposed to BGE becoming a holding company, we just want to make sure there are certain oversights," said John Sayles, an assistant people's counsel.

"We're concerned that none of the issues, from taxes to the environment, have been dealt with in any way," said Jim Hunter, president of the IBEW's Local 1900, which is attempting to organize BGE employees. "And yet, the legislators seem to want to offer a certain date for implementation."

BGE also opposes the proposed revised timetable and other amendments, contending deregulation should be separated from the holding company legislation. The utility says that a July 2000 timetable would not give legislators enough time to craft necessary laws to deal with issues of so-called "stranded costs," or power plants that become obsolete under a competitive framework.

Conversely, out-of-state utilities such as Houston-based Enron Corp. are hotly pushing to speed up competition in an effort to gain customers and expand geographically.

"If we don't get legislation next year to address the issue of stranded costs, then we're hanging out there at risk," said David A. Brune, a BGE vice president and its chief financial officer. "And that's a risk we're not willing to take."

Earlier this week, Annapolis swirled with speculation that BGE would even shift its headquarters to Delaware if either the holding company bill didn't pass or if the amendments weren't dropped. Company officials downplayed that notion yesterday, though.

"The only thing we said was that we wouldn't have problems forming a holding company if we were a Delaware corporation," Brune said. "There's no talk of moving our headquarters."

BGE has advocated killing the holding company bill unless the amendments are removed, sources said.

Goal of lower prices

Miller and other lawmakers, taking cues from states such as Pennsylvania, California and New York, expect that deregulation will spur lower electricity prices for Maryland customers.

In some states, competition has lowered power costs for many customers by more than 20 percent.

"The issue here is lower costs for the consumer," Miller said. "That's the Alpha and the Omega."

Miller said bills to deal with the issue of stranded costs and tax ramifications of deregulation are likely to be crafted in the 1999 session, a year before competition is implemented.

"It's a complicated issue," Hunter said. "And there are billions of dollars involved on both sides."

Pub Date: 3/26/98

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