Electricity deregulation is put on hold again

City circuit judge orders delay to let trade group have say

July 22, 2000|By William Patalon III | William Patalon III,SUN STAFF

In the on-and-off legal drama surrounding the plan to deregulate the electricity market in the Baltimore area, yesterday ended up being another day with another stay.

Just one day after Maryland's highest court lifted its stay that had delayed Baltimore Gas & Electric Co.'s deregulation plan for three weeks and sent the case back to Baltimore City Circuit Court, circuit Judge Albert J. Matricciani Jr. issued a stay putting deregulation back on hiatus until at least Aug. 4.

"I'm going to impose an interim stay - which has absolutely no implications for how I will rule on Aug. 4, or whether the stay will remain in place," Judge Matricciani told the dozen lawyers involved in the case who were dialed in to a conference-call hearing conducted from his courthouse chambers downtown. "I want the opportunity to read over whatever is brought before me," and to give each of the parties a chance to file written arguments supporting their respective positions.

The stay had been requested by the Mid-Atlantic Power Supply Association, a New Jersey-based trade group that represents power producers - including several companies that would like a piece of the electricity business in the Baltimore region.

The association, known also as MAPSA, had twice sought a stay from city Circuit Court but was denied each time. MAPSA then asked the Maryland Court of Special Appeals for a stay and was denied, and finally turned to the Court of Appeals, which on June 30 ordered the stay for deregulation in Baltimore and the five surrounding counties - only hours before the sweeping agreement was to take effect.

`Standing' granted

Thursday, the Court of Appeals lifted its stay and sent the case back to the Circuit Court - but it also granted MAPSA's request for "standing," which gave the trade association the legal right to intervene in the case.

Thursday afternoon, MAPSA used its newfound legal status to petition the Circuit Court for a temporary stay that would halt the rollout of deregulation so that it might persuade the court to shelve the plan.

BGE, the Maryland Public Service Commission and the Office of the People's Counsel - which stands as the guardian of consumers' rights in utility matters - were united in their desire to have the plan take effect.

Striving for fairness

However, Matricciani said that to be fair to all the competing interests - and to avoid the debacle of having to halt, or modify, the deregulation plan after it has been in effect for several weeks - it was better to delay the implementation until MAPSA's request for a permanent stay could be argued in court with all parties present.

"We were very pleased," said Kenneth Wiseman, a Washington-based partner of the Houston law firm of Andrews & Kurth LLP, which represents MAPSA. "The court did the right thing, and we're very appreciative. ... This was the result we were seeking."

BGE was less than thrilled. In fact, after the Court of Appeals lifted the stay Thursday, BGE took steps to abide by the deregulation agreement, a key element of which is a six-year, 6.5 percent rate decrease for roughly 1 million residential consumers in the Baltimore region.

The utility announced that it was lowering rates retroactively to July 1 - when deregulation had been slated to begin - and processed, printed and stuffed into envelopes 62,000 bills based on the new rates.

Those bills were sitting on loading docks, awaiting the mailman's pickup, when the delay was ordered.

BGE President Frank Heintz said he was disappointed by yesterday's outcome. "We are disappointed for our own customers," he said. "We're back to sending out bills based on the non-reduction rates."

If it takes effect, the rate reduction will pare the average residential utility bill by $65 to $70 annually, BGE said.

One of the issues that is sure to foster more ill will is "stranded costs," the utility industry term for money due an electricity producer as repayment for the power plants it has built.

As part of the PSC deregulation agreement, BGE is owed $528 million in stranded costs by its 1.1 million residential, commercial and industrial customers.

MAPSA says that figure is 50 to 100 percent too high, meaning BGE is owed, at most, $250 million - and perhaps nothing at all.

The trade association has repeatedly argued that the recovery of this stranded-cost money is little more than a stealthy way for BGE to bar competition by using it to subsidize artificially low electricity prices - prices so low that other power producers seeking market share here will be unable to compete.

BGE rejects that argument, alleging that MAPSA's calculations use erroneous numbers, and that other experts who have reviewed these figures - independent of one another - have confirmed BGE's figures as correct, said Wayne Harbaugh, a BGE economist who manages pricing and supplier services.

Heintz, BGE's president, said he's confident the local utility will be vindicated when the case resumes early next month.

Then, there will be no more stays, and Maryland's electricity industry will be deregulated, to the benefit of power users statewide, he said.

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