Electric rates called excessive People's Counsel asks PSC to order BGE to cut them


September 04, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The state agency responsible for protecting residential customers' utility rights claims that Baltimore Gas and Electric Co. has been overcharging consumers and has asked regulators to cut electric rates by $110 million.

The Office of People's Counsel's action marks the first time in at least five years that the agency has challenged BGE's rates. If successful, the rate decrease would trim a few dollars a month off the average residential electric bill.

"Our analysis shows that BGE's electric rates are too high and that BGE has been earning more than it should for many months," said Michael J. Travieso, head of the Office of People's Counsel (OPC). "These rates must be reduced to protect the interests of residential customers."

The OPC contends that for the 12 months that ended June 30, BGE overcharged customers because its capital investments have decreased, expenses have been cut and the utility has claimed depreciation on assets that are not allowed.

In addition to asking that BGE's revenue be investigated, the OPC requested that the regulators hold hearings to "review the facts and set rates that are 'just and reasonable' as required by Maryland law," according to a filing submitted yesterday to the Maryland Public Service Commission (PSC), the state agency that regulates utilities.

BGE, which provides electricity to 1.1 million customers in Central Maryland, described the OPC's filing as "radical and ill-timed."

7+ "We don't believe we are overcharging,"

said Bob Fleishman, a BGE vice president and the utility's general counsel. "We've reduced our fuel rate 10 times since 1993, our rate is the lowest in the state and below the national average.

"This is the same People's Counsel that fought us on our merger [with the Potomac Electric Power Co.], and whose initial comments to our restructuring plan in The Sun was to say that they would 'litigate the hell out of it.' "

If a rate decrease occurs, it would reduce BGE's $2.7 billion in annual revenue from utility operations and have a slight effect on the utility's overall profits.

Travieso added that the OPC's move is intended to adjust BGE's rates prior to the deregulation of the electric industry in Maryland, which is set for July 2002. As part of a local industry restructuring plan, BGE has offered to freeze electric rates through 2003.

"BGE's rates have to be right before any restructuring decision is made by the PSC," Travieso said. "If BGE's rates are too high, customers could end up paying too much for years to come."

The OPC petition to cut BGE's rates -- which are set by the PSC -- follows a similar call last month to adjust Pepco's rates downward by nearly $20 million. The OPC's petition to the PSC came in response to a Pepco request to raise rates by $56.3 million.

In that petition, the People's Counsel contended that Pepco based its rate increase request on results that were skewed by unusual weather conditions.

Glenn F. Ivey, chairman of the PSC, declined to comment on the OPC's filing, saying he had not had a chance to thoroughly review it.

The PSC is likely to hold hearings in the coming weeks and issue an order in response to the OPC filing within 10 months.

Pub Date: 9/04/98

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