Governor offers $25 million to ease BGE rate increases

March 17, 2006|By JILL ROSEN | JILL ROSEN,SUN REPORTER

Moving to blunt the effects of a 72 percent spike in electric rates this summer, Gov. Robert L. Ehrlich Jr. offered $25 million yesterday to help pay the bills of poor Marylanders - his first significant move after days of criticism that his administration was failing to act.

Ehrlich, on the steps of the State House, also vowed to stop the drastic increases. "Seventy-two percent will not stand," the governor said after what he called a "very productive meeting" to discuss the rates situation with House Speaker Michael E. Busch. "Anything close to 72 percent will not stand."

The increases in electricity rates - which could hit as soon as July - continue to dominate debate in Annapolis, with political accusations flying thick a day after Comptroller William Donald Schaefer ripped into Ehrlich for not protecting electric customers.

On average, residential customers of Baltimore Gas and Electric are projected to pay an additional $743 annually as the result of an energy deregulation plan that has imposed price caps since 1999. Some BGE customers - the ones who have signed up for budget billing - have opened bills that reflect the higher rates.

Derrick Jessup - head organizer in Baltimore for the Association of Community Organizations for Reform Now, or ACORN - said the governor's $25 million aid fund is nowhere near enough to cover the state's low-income residents. He said it's not even enough to help the people who can't pay their bills now - before the increase kicks in.

"That might just do in Baltimore City. Maybe," he said.

The state's Office of Home Energy Programs in the Department of Human Resources would administer the proposed assistance, included in a supplemental budget request Ehrlich sent to the General Assembly yesterday.

Ehrlich declined to get into specifics about other "innovative" options he and Busch discussed, aside from saying the speaker will be putting together a bipartisan workgroup to study the matter.

Senate President Thomas V. Mike Miller was invited to the meeting but did not attend.

The governor expressed confidence that a solution was near.

"I am very pleased with where I see this going at this time," he told reporters, adding that he feels "very strongly" that lawmakers will reach a resolution before the legislative session ends in mid-April.

BGE officials said yesterday that of the company's 300,000 budget-billing customers - whose bills are based on an estimate of annual energy usage - about 50,000 are seeing some of the 72 percent rate increase factored into their monthly charges.

"Some customers are seeing increases up to 70 percent," BGE spokesman Rob Gould said, adding that in some cases, soaring natural gas prices are also to blame for the higher bills.

The company, however, is offering affected customers an option to lower their costs. Gould said BGE is sending out automated calls and letters to those customers, instructing them to call BGE by March 24 to arrange for the relief.

He did not provide details on what form that relief would take.

Also yesterday, the specter of the utility crisis overshadowed debate on the Senate floor regarding the Healthy Air Act, a bill that would clamp down on power plant emissions.

Some lawmakers argued - for nearly three hours - that tougher pollution standards for the state's power plants could result in an even harder hit on people's wallets.

Sen. E.J. Pipkin, an Eastern Shore Republican, said it takes "courage" to consider the Healthy Air Act with the rate hikes looming.

"We need to be very cautious and meticulous, he said. "We're going to get the goals this bill wants to achieve ... but what we don't want to have happen is we pass this bill, rates increase and our constituents say, `You legislators in Annapolis passed something that adds pain to our situation.'"

Sen. David R. Brinkley, a Frederick County Republican, compared restricting the power industry now to jumping into the surf at the beach when everyone was jumping out.

"I hear the theme from Jaws," he said. "We're dealing with something that threatens the reliability and availability of power in the state."

The bill would require plants to reduce emissions of carbon dioxide, mercury, sulfur dioxide and nitrogen oxide.

Paul J. Allen, Constellation Energy's senior vice president for corporate affairs, said the bill would require plants to invest in millions of dollars of new equipment - costs that would ultimately make power more expensive.

But environmentalists and the bill's backers said the threatened higher costs were nothing more than fear-mongering coming from an industry that doesn't want stricter regulations.

"The effect of this on the cost to consumers is zero," said Sen. Paul G. Pinsky, a Democrat from Prince George's County and the bill's sponsor. "The rate is set by the market, not by operating costs."

Opponents in the race for governor continued yesterday to spar on the rate increase issue.

Montgomery County Executive Douglas M. Duncan announced that he had returned campaign contributions from BGE and Constellation Energy. He challenged his opponents to follow suit.

Ehrlich did not bite.

"Enough with the politics," the governor said. "We're talking about real issues here."

jill.rosen@baltsun.com

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