Electric showdown

March 19, 2006

With just three weeks left in the General Assembly session, legislators are about to face off with Baltimore Gas & Electric Co. over coming sharp electricity rate increases and with the utility's parent over plans to merge with a Florida company. At stake: whether BGE's 1.1 million customers will suffer electric-bill increases of 72 percent this summer; whether Constellation Energy's $11.5 billion merger with FPL Group will be delayed or even torn apart; and whether Democrats or Republicans will take the credit or blame in this fall's elections.

Last week was political prologue, a time for finger-pointing over the state's 1999 deregulation deal with BGE (Democrats deserve the hit) and for slamming Gov. Robert L. Ehrlich Jr. for turning the Public Service Commission into an industry stooge. (A private meeting with his PSC appointees rightfully added fuel, as did revelations yesterday of improper communication between PSC chairman Kenneth D. Schisler and an industry lobbyist.) This week is time to get to the substance. House Speaker Michael E. Busch is promising a package of legislative measures. Senate President Thomas V. Mike Miller has invited Constellation executives to meet tomorrow. A dozen or so utility bills have been filed, suggesting slices of a solution. A comprehensive plan should include:

Consumer relief: BGE customers can't be left to pay 72 percent more for electricity this summer or to defer this increase at the cost of racking up interest charges. A handy target for the legislature is the more than $500 million paid by BGE to cover Constellation's supposed losses when it took over the utility's power plants, once thought to be worth much less than their value now. A new appraisal might peg the value of these assets, built with BGE customers' money, even higher, triggering a push for an even greater subsidy from Constellation to temporarily dent the rate increases.

State control over the merger: Constellation says it's subject only to federal approval, but asserting the legislature's authority would allow the state to twist BGE's arm on consumer relief. Similarly useful would be clarifying that the Public Service Commission also has control over the merger and then giving the attorney general's office funds for consultants to aggressively represent the state's interests in the PSC hearings.

Safeguards: Turning back the clock entirely, as some have suggested, is appealing but impractical. Short of that, the legislature should insist on safeguards so that Constellation follows through on promises that after the merger, BGE will operate independently to best serve its customers. After all, as it now stands, BGE will become a cog in a big firm largely controlled elsewhere.

It's possible that all this could kill Constellation's merger plans, but that's separate from staving off higher costs under electricity deregulation. That is where world energy markets have gone and where, under deregulation, Marylanders' bills ultimately are headed. Three weeks in the legislature is a lifetime, but not long enough to alter that.

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