Firings at PSC under attack

Ehrlich changes left agency unprepared for energy hike, critics say

March 11, 2006|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

Leading lawmakers said yesterday that the state agency that regulates utility companies is ill-equipped to protect consumers from a looming 72 percent electric rate increase because of staff changes made by Gov. Robert L. Ehrlich Jr. and his allies in pursuit of a pro-business agenda.

"The governor's public service commissioners and personnel have turned the PSC into lackeys for the utility companies," said Senate President Thomas V. Mike Miller, one of several Democratic lawmakers who said that the regulatory body has fallen short in protecting consumers from an impending crunch when electric rate caps are lifted in July.

"I don't think that the PSC is thinking proactively," said Sen. Thomas M. Middleton, a Charles County Democrat and chairman of the Finance Committee, which oversees utility issues. "They're not in the protect-the-consumer mode as much as the legislature is."

Ehrlich yesterday called on the state Public Service Commission to develop a workable solution to the rate increase in conjunction with lawmakers and Constellation Energy, the parent company of Baltimore Gas and Electric Co.

"A 72 percent increase in the rates is unacceptable," Ehrlich said. "The rates ... will not stand. When everybody gets through the finger-pointing, we can sit down and put together a comprehensive plan that will work for Maryland ratepayers, Maryland utilities and Maryland citizens."

BGE electricity rates have been frozen since 1999 as part of the legislation that deregulated Maryland's power industry. The rate caps are due to be lifted this summer, just as world energy prices have spiked amid geopolitical uncertainty and the aftereffects of Hurricane Katrina.

Leading Democrats were skeptical that the PSC would be able to soften the blow to consumers, saying it has become a lapdog of the utility industry under the Ehrlich administration.

The agency has seen significant turnover among its professional staff since the governor took office and was subject to lawsuits from former employees who said the Ehrlich-appointed chairman went too far in trying to clear out longtime workers in favor of administration loyalists.

This week, the PSC announced it had reached an agreement on how to soften the blow of the rate increases: a plan in which consumers would pay 5 percent interest on delayed billing increases. Enrollment in the plan would be automatic, but consumers could opt out.

Miller said BGE executives offered a better deal in a meeting with him and House Speaker Michael E. Busch last week than the one the PSC approved Monday.

"We don't want to bring the utility companies to their knees, but we do need to bring them to their senses," Miller said. "Right now with an ally in the governor's office, the utilities think they can run roughshod over the ratepayers."

Public Service Commission Chairman Kenneth D. Schisler, who was a Republican delegate from the Eastern Shore when Ehrlich appointed him in 2003, defended the deferral plan.

"There is no free lunch. There are real costs, and the utilities have the right to recover their costs," he said in a briefing with the Senate Finance Committee.

Ehrlich takes pride in steps his administration has taken to make Maryland more business-friendly. At an announcement of the state's record low unemployment rate yesterday, he said that orientation was one of the main reasons he was elected.

"The private-sector mentality we've brought to government, which is something historic in this state, is something we're proud of, obviously," he said.

Later in the day, his office attempted to use concern over the BGE rate increase to bolster his position -- and that of the utility industry -- in opposition to additional pollution regulations on power plants.

"As the administration and the General Assembly move toward solutions to the expected increases in electricity costs this year, the Senate [Education, Health and Environmental Affairs] Committee's decision to pass the [pollution] bill is a direct threat to electricity prices and supplies in Maryland," Ehrlich said in a statement.

William F. Fields, a lawyer in the Office of the People's Counsel, which represents consumers in rate hearings, said the final PSC plan is better than the one the commission's staff drafted. The draft would have required consumers to pay 12.5 percent interest on the deferred payments, instead of 5 percent.

But Fields said his office suggested an alternate plan that would allowed consumers to defer part of the increase without paying interest. It was not adopted.

Miller and Busch said they don't think either the PSC or the people's counsel is doing enough under the Ehrlich administration to protect consumers. Both said they see the problems facing ratepayers to be a direct result of Ehrlich's efforts to make those agencies more industry-friendly.

About the same time that Ehrlich named Schisler to the PSC, he fired longtime People's Counsel Michael J. Travieso, a move consumer advocates worried would weaken the agency's watchdog role.

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