PSC bill sidesteps court's ruling

Amendment would let regulators issue orders without formal steps

April 10, 2002|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

A last-minute amendment tacked onto a bill passed by the Maryland General Assembly could nullify an appeals court ruling issued this week and give broader authority to regulators who monitor utility service in the state.

The amendment approved by both legislative houses late Monday - the last day of the session - would allow the Maryland Public Service Commission to bypass formal administrative procedures when issuing orders.

The amendment, which is retroactive to June 1, 2000, would effectively cancel a state Court of Appeals decision issued earlier Monday. In that opinion, the state's highest court overturned a PSC order limiting links between utilities and their unregulated affiliates on procedural grounds.

"Obviously, the Court of Appeals decision of that magnitude in the field of regulations is very important," said Del. John Adams Hurson, chairman of the House Environmental Matters Committee, which oversees restructuring issues in the state. "It had major implications for the work that had been done on electricity deregulation. It was basically undoing four years of work."

"That's something we couldn't sit still for in the legislature," Hurson said. "So a number of people got together to put together language in an amendment that would support the PSC."

The court decision grew out of a PSC order, issued June 30, 2000, restricting traditional gas and electric utilities' right to share brand names, personnel and assets with their unregulated affiliates. The order created a code of conduct that forced affiliates to pay royalties to the utility for use of logo or names; established limitations on sharing personnel, attorneys and assets with unregulated affiliates; and prohibited joint promotions and marketing.

Fourteen utilities immediately took the commission order to court. They complained that the rules created unfair advantages for out-of-state competitors. The PSC order was upheld in Wicomico County Circuit Court, and the utilities appealed.

While the appeals court did not deal with the substance of the PSC order, the decision effectively invalidated the code of conduct on procedural grounds.

The court ruled that instead of using "generic proceedings" to issue an order, the PSC should have held formal proceedings with public notification, public response and legislative review of the directives to adopt regulations that affected all utilities. Such a process could take as long as six months.

"The court did not reverse or remand the substance of the order," said Susan S. Miller, PSC general counsel.

"It meant that we had to figure out how to deal with the affiliate case again, whether we would start a rule-making process that would take six months or deal with affiliate practices on a case-by-case basis for each utility. Either scenario would take a lot of time.

"But worse, the ruling also called into question the procedures that the commission had been using for the past 90 years without objection," she said.

Miller said the ruling could have forced the PSC to revisit other cases to issue regulations instead of orders. The amendment would free the commission to take swift action on issues and hold hearings or conduct proceedings as it sees fit.

Contacted yesterday, utility representatives said they were studying the amendment to understand its ramifications.

"We're not sure of what to make of this yet," said Charles B. Welsh, a Baltimore Gas and Electric Co. spokesman. "Two things are involved here. From the broader perspective, this is a procedural change that applies to every business that is regulated by the PSC and how the commission conducts its business. This is not limited to BGE.

"Then there is the specific issue which is the affiliates standards case," Welsh said.

"The court did not address the substance of the case. ... We're going to have to evaluate over time what the ramifications of the procedural change are."

The amendment was added to a bill that would ensure funding for the PSC and Office of People's Counsel, which represents consumers.

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