Assembly nears OK of deregulation

Glendening, leaders work to effect utility compromise

`We've got a ways to go'

Governor eases stand on environmental and rate-cut issues

April 01, 1999|By Gady A. Epstein and Timothy B. Wheeler | Gady A. Epstein and Timothy B. Wheeler,SUN STAFF

General Assembly leaders say they hope to resolve the final details of a controversial electric deregulation bill this week, setting up the possibility of an end-of-session showdown with Gov. Parris N. Glendening should he veto the legislation.

The governor, sensing swift movement on the issue, met with the House speaker, Senate president and a top senator yesterday in an effort to hammer out a deal. He softened his insistence on environmental protections in the bill and offered a compromise on his demand for a larger rate cut for residential consumers.

"We may yet have a bill," Glendening said last night. "We've got a ways to go, but progress is coming."

The House and Senate overwhelmingly approved similar deregulation bills last week, and leaders are certain the General Assembly will send a final measure to the governor before the session ends April 12. But the possibility of a veto by Glendening pushed them to accelerate the pace this week.

Under the Maryland Constitution, if a final vote in the Assembly occurs by Monday, Glendening would have a week to accept or reject the bill. If he were to reject it, legislators could take the rare step of trying to override a veto in the session's waning hours.

"It would be a historic event, were it to occur," said Steven L. Arabia, a lobbyist for Potomac Electric Power Co., which needs deregulation to pass to move ahead with a planned sale of its power plants.

Arabia noted that if the bill were to pass later in the session, a veto by the governor could occur after the General Assembly adjourns, leaving utilities in limbo until the legislature meets again next year.

"A lot of people spent a lot of time, money and effort trying to get this done right, so anything that can be done to impose a level of certainty would be a good thing," Arabia said.

The deregulation legislation would give consumers a choice of power companies starting in July of next year. The House and Senate bills call for a residential rate cut of at least 3 percent, to remain in effect for three or four years.

Big businesses want the legislation because it would allow them to shop for cheaper electricity rates, saving them as much as 10 percent to 15 percent on their power bills.

Utilities also favor the bill, in part because it would allow them to recover hundreds of millions of dollars in investments they made in power plants before deregulation, when they were guaranteed customers and profits.

But environmentalists and consumer activists have urged Glendening to veto the legislation as it now stands because it doesn't include a large enough rate cut for residential customers or provisions to promote clean power.

Glendening had called for a minimum 7.5 percent residential rate cut and tough environmental safeguards. Yesterday he showed a willingness to compromise on both counts, particularly on the environment.

Rather than penalizing dirty, out-of-state power plants with a pollution tax -- which Glendening had discussed with enthusiasm -- he proposed yesterday studying the idea. He is calling for a residential rate cut of 6 percent.

The escalation of negotiations yesterday was in marked contrast to the governor's limited role earlier in the session-long debate over electric competition, reflecting the momentum legislators believe they have to pass a deregulation bill whether Glendening wants it or not.

Environmental activists, who have pinned their hopes on the governor, were disappointed with his proposal for a study of the pollution tax.

"Unfortunately, this would mean the industries would get deregulation next year, and there are no measures in place to counteract the environmental consequences," said Dan Pontius, executive director of Maryland Public Interest Research Group.

Pontius and consumer activists also believe the bill needs a larger rate cut for residential customers, who will not have as much negotiating power as large companies to win lower rates. Experts believe residential customers could see relatively small savings or even rate increases once any temporary rate cut expires.

Opponents of the bill also note that under the House and Senate measures, utility regulators would have the flexibility not to cut rates at all, despite the legislation's intent for a minimum 3 percent rate cut.

Pub Date: 4/01/99

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