BGE bid to halt privatizing of Meade utilities rejected

Federal judge rules Army may sell pipes, wires to 3rd parties

March 14, 2001|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

A federal judge has ruled against Baltimore Gas and Electric Co. in a lawsuit the company filed to block the U.S. Army from privatizing utilities at military installations, including Fort Meade in Anne Arundel County.

In a decision filed Monday, U.S. District Judge Andre Davis said the Army could sell the pipes and wires that distribute the gas and electricity to private third-party contractors as long as the federal government enforces state standards to maintain the safety of such equipment.

BGE officials said yesterday that they were still reviewing the ruling.

"We can say that we're disappointed in the decision and we're still studying our options," spokeswoman Makina Street said.

Army officials said the decision allows them to continue with the contract process. They began evaluating solicitations from private utility companies in April, but couldn't award a contract until a court decision was made.

BGE had argued in the lawsuit that it is the only utility company in Maryland authorized by the state Public Service Commission to provide electricity and natural gas distribution in the Fort Meade area.

The Army said it was under a congressional order to privatize parts of its utility systems and was pleased with the decision.

"It was certainly what we expected," said Doug Korn- reich, assistant district counsel with the Army Corps of Engineers. "The federal government wants to get competition for utility systems on Fort Meade, and this decision confirms that the government is allowed and required to do that."

Enron Corp., the largest wholesale marketer of natural gas and electricity in North America, intervened on the Army's behalf, contending that BGE didn't want competition.

BGE also had argued that the loss of Fort Meade business could result in higher rates for BGE customers. The Maryland Public Service Commission intervened on BGE's behalf on that issue, but the judge said potential rate increases couldn't be proved.

The Army announced plans to privatize in 1998 as part of a nationwide effort to cut spending by the Department of Defense.

BGE and Virginia Electric and Power Co. also protested the Army's solicitation to the General Accounting Office - a congressional watchdog agency that oversee federal procurement. The GAO also ruled in favor of the Army.

The judge wrote that "the fact that the GAO validated the Army's position is persuasive authority supporting that position."

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