Don't blame deregulation for the 72 percent pop in electricity bills that Baltimore Gas and Electric customers will see after July 1, says BGE.
"It is not deregulation that has failed," BGE spokesman Rob Gould said on WYPR radio last week. "The real cause for the price increase is the world energy market."
But for all of BGE's and parent Constellation Energy's portrayals of themselves as victims of high energy costs, the facts show not only that regulation would have softened this kind of rate shock but that deregulation was fixed from the start in their favor.
For one thing, deregulation was what exposed BGE ratepayers to the world energy market by cutting them off from the low-cost coal and nuclear generators BGE used to own.
On Sunday, I wrote that electricity bills in Michigan are a third less than what BGE's will be because regulators stopped deregulation short and forced Detroit Edison to keep its coal and nuclear plants, passing the low cost to households.
This column revisits the heart of deregulation - the 2000 sweetheart deal that shifted BGE's generators to parent Constellation and that is now being re-examined by the General Assembly.
The transaction - basically a paper shuffle - morphed what should have been benefits for households into profits for Constellation and bonuses for its bosses.
The generation plants changed hands on another fateful July 1 - July 1, 2000. One day they were owned by the heavily regulated BGE. The next day they were owned by Constellation, which could then peddle their megawatts to anybody and eventually force BGE and ratepayers to bid for juice in the open market.
Of course, you're saying, Constellation must have paid BGE ratepayers a fair price for those valuable facilities.
When Potomac Electric Power Co. sold its generation plants to Mirant Corp. in 2000, the resulting $424 million capital gain paid for, among other things, basically seven weeks of free electricity for Pepco customers in Maryland.
BGE customers, alas, got no such gain. For some reason Constellation got to take over BGE's plants at book value. No cash changed hands. No premium was paid. No gains flowed back to customers.
In fact, it was just the opposite. You, the electricity customers, paid Constellation to take the valuable plants off BGE's hands!
Like other power companies, Constellation argued that the plants would become uncompetitive after deregulation and that electricity customers should compensate them, essentially helping to pay the facilities' mortgages.
