Court short- circuits BGE plan

Last-minute order halts deregulation, stops rate decrease

July 01, 2000|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Just hours before deregulation of Maryland's electric power industry was to begin, the state's highest court issued yesterday an order prohibiting the start of the controversial plan in the metropolitan Baltimore region.

The Maryland Court of Appeals' last-minute order affected only the region served by industry giant Baltimore Gas and Electric Co. - about 1 million residential customers in Baltimore and the five surrounding counties. The action prevents the 6-year, 6.5 percent rate reduction, which was part of the deregulation plan and was scheduled to become effective today, from kicking in.

The court acted on an appeal filed by the New Jersey-based Mid-Atlantic Power Supply Association that challenged terms of a settlement approved in November by the Maryland Public Service Commission.

The group contends that the plan favors BGE and will not provide for meaningful competition for residential customers.

As part of its appeal, MAPSA also sought to prevent BGE from collecting $528 million in "stranded costs" from its 1.1 million residential, commercial and industrial customers. The utility says those costs constitute a partial repayment for the expense of building power plants.

In yesterday's order the court scheduled a hearing for July 20. But late yesterday BGE filed an emergency motion for reconsideration of the court's order. Company officials said the matter will probably not be considered by the Court of Appeals until next week.

"What happens at this point will be determined in court," said Glenn Ivey, commission chairman.

Deregulation begins as scheduled today in Potomac Electric Power Co.'s service territory in Prince George's and Montgomery counties, the Allegheny Power territory in Western Maryland and the Conectiv Inc. territory on the Eastern Shore, Ivey said.

"We hope this is just a temporary delay for residential customers in Central Maryland to receive their rate reduction," he said.

Robert S. Fleishman, vice president of corporate affairs and general counsel of Constellation Energy Group, BGE's parent company, said the association's "last-minute ploy is an attempt to derail a plan that ushers in competition for all BGE's customers."

Suzanne Daycock, the association's executive director, said the group's argument isn't with the rate cut.

"Part of me is gratified [with the court order], while another part of me believes it's unfortunate that BGE's customers will see a delay in their rate cut," Daycock said. "We have tried exhaustively to settle this case with BGE for well over a year, and, frankly, it's unfortunate that the case has had to come to court at this point in time."

MAPSA contested the settlement agreement before it was approved by the Public Service Commission, saying it would not allow for electric competition. The association charges that BGE has overstated its stranded costs, leading to a lower "price to compare" - the price BGE will charge consumers for generating power.

Competitors would have to undercut BGE's rate of 4.224 cents per kilowatt hour to save customers money. The association contends that the rate of 4.224 cents is artificially low and was designed to keep out competition. The rate is scheduled to rise to 5.02 cents after six years.

Although metropolitan Baltimore's electric market was set to be deregulated today, none of the seven power suppliers licensed by the Public Service Commission to sell electricity to residential customers has posted electric rates.

Marketers have been allowed to solicit customers to switch since April, but BGE officials said they have not received notifications from power companies that any of their residential customers have switched to another supplier.

The association's appeal worked its way through Maryland's judicial system for six months before the Court of Appeals issued yesterday's stay.

MAPSA filed an appeal in Circuit Court in Prince George's County in December; then it was transferred to Baltimore City Circuit Court, which was already considering appeals filed by Trigen Energy Baltimore, a BGE competitor, and Sweetheart Cup Co., one of BGE's large industrial customers.

Trigen and Sweetheart recently settled their disputes with BGE out of court.

In March, BGE petitioned the Circuit Court to have the association's case dismissed on the grounds that the group had no standing. The Circuit Court ruled in favor of BGE.

On Monday, the Circuit Court reconsidered its decision, but still found in BGE's favor. The association then appealed to the Court of Special Appeals, the state's second-highest court, on Tuesday. It denied the group's request early yesterday.

Later yesterday, MAPSA was granted a stay to BGE's settlement terms by the Court of Appeals.

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