Lawmakers make amends to good corporate citizen

January 31, 1999|By Barry Rascovar

LAWMAKERS don't often admit their mistakes and correct the error of their ways. Yet that's what the General Assembly and Gov. Parris Glendening are in the process of doing to make amends for nearly driving Baltimore Gas & Electric Co. from this state.

Not literally, of course. BGE is tied to central Maryland. That's where the state's largest utility generates, transmits and distributes power to 2.6 million residents. The forerunner to today's company was founded here in 1816.

But last year, legislators came close to passing a bill that would have wreaked havoc with thoughtful efforts to deregulate the electric power industry. It also would have severely hamstrung BGE, precipitating a shift of its corporate charter to Delaware.

What a blow that would have been to Maryland's economic development image. Chasing out the state's prime utility would only underline the impression of an anti-big business atmosphere in Annapolis.

It was a major blunder brought about through ignorance and political manipulation by lobbyists for companies trying to rush electric deregulation into Maryland.

Lawmakers didn't understand -- or didn't want to understand -- that two separate issues were being lumped together: Deregulating the power industry in Maryland and permitting BGE to form a holding company.

A corporate need

The two have nothing to do with one another, except that BGE needs to form a holding company to compete effectively in a deregulated environment.

Maryland is the only state that forbids its home-chartered utilities from creating holding companies. With one hand tied behind its back, BGE would be a sitting duck for an out-of-state takeover.

Forming a holding company would help BGE issue bonds to pay for the growth of non-regulated businesses, especially in its booming power-trading operation. That's critical if the company is to expand and survive. Otherwise, it could join the ranks of Maryland companies gobbled up by out-of-state competitors.

The holding company bill became embroiled last session in the deregulation fight. It was taken hostage by anti-BGE forces, who succeeded in merging the two issues. The waters were so muddied that nothing was enacted.

But such open hostility convinced BGE executives to shift their corporate charter to Delaware. That way, BGE could immediately form a holding company.

Legislative goof

When word of this decision reached the State House, legislative leaders and the governor realized they'd goofed. They scrambled to reverse BGE's decision.

Senate President Mike Miller, never a holding company fan, changed his tune. He and House Speaker Casper Taylor joined the governor in announcing that an unamended holding company bill would be passed and signed into law in the opening weeks of this year's session.

The bill has whizzed through both chambers and should be on the governor's desk next week. Nearly everyone is jumping on board this time.

Richard C. Mike Lewin, the state's new economic development secretary, told lawmakers the bill would send a message about Maryland's positive business climate. He voiced fears that without this bill BGE could be a target of a hostile acquisition.

Mr. Taylor said the bill was critical to put BGE on a level field with other utilities as Maryland prepares for electric deregulation.

Public Service Commission chairman Glenn F. Ivey threw his support behind the bill, too. The PSC's powers to regulate BGE and protect consumers wouldn't change as a result of the bill's passing, he said.

Even the PSC's people's counsel, Michael J. Travieso, who vehemently opposed BGE's bill last year, supported the measure. He correctly noted that the PSC would retain jurisdiction over electric power matters and that other concerns could be handled when the legislature takes up deregulation.

BGE's move

BGE spent much time and money educating legislators about a relatively mundane bit of corporate reorganization. It succeeded in getting the message through that a holding company would strengthen this home-grown corporation, which is eager to see its nonregulated businesses in Maryland prosper.

BGE has been a solid corporate citizen. Giving it equality with nearly all other utilities should have been a no-brainer. But the legislature blew it a year ago. Luckily, elected officials have had the luxury of time to get it right.

Barry Rascovar is a deputy editorial page editor.

Pub Date: 1/31/99

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