2 legislators hit report by Travieso

Bromwell, Hurson defend electric deregulation

Willing to review law

`You don't throw the baby out with the bath water'

January 19, 2002|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Two key legislators said yesterday that they are willing to review electricity deregulation in Maryland, but disputed a report by the Office of the People's Counsel that said deregulation has failed to produce competition and could put residential customers at risk of higher power prices. The two called the report "premature" and rejected any suggestion that deregulation be suspended.

Sen. Thomas L. Bromwell, an architect of Maryland's deregulation law, blasted People's Counsel Michael J. Travieso for criticizing Maryland's deregulation plan and failing to share the report's findings with legislators before releasing it on Wednesday.

Del. John A. Hurson, who chairs the House Environmental Matters Committee, was more restrained but also discounted any major revamping.

In the report - the first major study of Maryland's restructuring plan - the OPC said that deregulation has fallen short of its goals to create competition and new services. The report recommended that the General Assembly consider suspending residential customer choice until the market has time to develop.

"You don't throw the baby out with the bath water," said an angry Bromwell, a Baltimore Democrat who chairs the Senate Finance Committee. "We did a lot of great things on this issue. I don't think I've got to read in The Baltimore Sun that competition hasn't started and that there are all these problems with deregulation. I'm not disagreeing that this isn't working. I am concerned, but there are good reasons why it isn't working. We've got some of the lowest rates in the country and a price freeze that lasts for six years."

"I am not opposed to overhauling the law, tweaking it, do something before the freeze comes off," Bromwell said. "I'm all for that. But no one is going to tell me we didn't pass the best deregulation bill in the nation. Instead of criticizing the law, People's Counsel should come in and sit down with us to take another look at the law."

"Dismantling deregulation or repealing any or part of the law would be acting precipitously," said Hurson, a Montgomery County Democrat. "I think it was right to raise the issue; we need to monitor it and review it. I'm just not sure what the review will show."

Hurson and Bromwell, whose House and Senate committees oversee deregulation in the state, said a group of legislators, or possibly a task force, would begin looking at the issue to decide how to protect the state's most vulnerable customers once price caps begin expiring.

Rate caps expire in July 2006 for residential customers in the Baltimore region and in July 2004 for other parts of the state.

In the 18 months since deregulation began, 2.6 percent of the state's residential customers have switched to an alternative supplier and only one company is soliciting new residential customers, according to the OPC report.

In the Baltimore Gas and Electric Co.'s service territory, the report said that only 14 residential customers had switched to another supplier.

Other deregulated states have performed somewhat better, including 15 percent of residential customers who switched in Ohio, 11 percent in Pennsylvania and 3.5 percent in New York.

Pointing to the tumultuous year in the energy industry, which includes the collapse of Enron Corp., California's power crisis and volatile prices throughout the country, Travieso said that changes in the market since deregulation was enacted have raised warning flags.

The problems that have plagued the energy industry over the last year could not have been predicted when the deregulation law was drafted and passed in 1999, Travieso said. Critics of the plan have complained that the law and subsequent settlement agreements that govern deregulation in various service areas in Maryland were too favorable to utilities and would prevent competition.

"Mr. Travieso was just as much in the negotiations to lower rates and extend the freeze as anybody else," Bromwell said. "Before he says its not my fault, he should be sitting down with us to fix this. Look, we have suppliers complaining because they can't come into the market because our prices are so low. We're not going to raise prices to create competition.

"I believe in a free market," Bromwell said. "But when you sit down and put ceilings and freezes in place, the market is going to take time to work its way out."

In response to Bromwell's reaction, Travieso said, ""I made a mistake. I should have shared the report with him before it was released to the press.

"I want to make clear that I'm not criticizing what the legislation did in 1999," said Travieso, the state advocate for residential customers in utility matters. "I'm saying the circumstances have changed a lot since 1999. We know a lot of things now that we didn't know in 1999. The fact that they're taking another look at deregulation, that is really all that I hoped to accomplish, to get a re-examination."

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