Scrambling for energy plan

State leaders, utility officials to discuss looming rise in electricity rates

March 20, 2006|By KELLY BREWINGTON | KELLY BREWINGTON,SUN REPORTER

Amid mounting scrutiny of the commission that sets utility rates, lawmakers will be meeting this week with the governor and energy executives to try to lessen the blow of an estimated 72 percent electricity rate increase this summer.

With three weeks remaining before legislators adjourn from Annapolis, Gov. Robert L. Ehrlich Jr. said he is planning to meet with House Speaker Michael E. Busch, and possibly Senate President Thomas V. Mike Miller, to discuss a plan for a more manageable rate increase for Baltimore Gas and Electric Co.'s 1.2 million customers.

"We agreed to work together on a central premise, which was my premise: 72 percent will not stand. Nowhere near 72 percent will stand," Ehrlich said Saturday during his Stateline radio program on WBAL. "We're going to put together a package. I'm very optimistic it can and will get done in the next three weeks."

Sen. Thomas M. Middleton, a Democrat from Charles County, said he, Miller and Sen. Edward J. Kasemeyer, a Democrat from Baltimore and Howard counties, plan to meet with Constellation Energy executives as early as today. Middleton, who chairs the Finance Committee overseeing more than a dozen bills related to the electricity industry, said he is hoping Constellation's chief executive officer, Mayo A. Shattuck III, attends the meeting.

Baltimore Mayor Martin O'Malley said yesterday the city solicitor will investigate whether BGE has violated the law by already factoring the 72 percent increase into the bills of thousands of Baltimore-area customers in its budget-billing program. "Billing these customers early raises a serious question as to whether the rate freeze law has been violated," O'Malley said in a statement.

Robert Gould, a spokesman for Constellation Energy, said yesterday the company has done nothing wrong and is simply trying to be "upfront" with customers.

"Any increase that we have put into customers' accounts as the result of the budget billing is in accordance with a long-standing PSC-approved formula," he said. "Where we see factors that will affect a customer's bill - up or down - we make those adjustments to the budget billing process."

BGE said that an estimated 50,000 of 300,000 customers enrolled in its budget billing program are already paying the higher rate.

Gould said BGE acknowledges that customers might have a tough time paying higher costs. The utility started a program Thursday, which runs through Friday, allowing some budget billing customers an opportunity to discuss ways to lower their bills. (Customers can call 888-232-3800 from 8:30 a.m. to 7 p.m. to discuss their accounts with a representative.)

"Right now we know there is going to be a 72 percent increase," Gould said. "We have to work under that assumption, despite the fact that there are discussions under way in Annapolis with the governor and the legislative leadership."

Ehrlich said Saturday that while a plan could emerge from the Public Service Commission, legislative action on the rate increases is likely.

The governor's comments came the day an article in The Sun reported on a series of e-mails between the chairman of the PSC and an energy industry lobbyist. The e-mails from February 2005 depict behind-the-scenes negotiating over the fallout of electricity deregulation and the discussion of sensitive strategies and board appointments.

Democratic leadership pounced on Ehrlich, calling the exchanges between Commission Chairman Kenneth D. Schisler and lobbyist Carville B. Collins inappropriate and an indication of the board's pro-business leanings. On Saturday, Sen. Brian E. Frosh, a Montgomery County Democrat, joined O'Malley in calling for Schisler's ouster.

Schisler and Ehrlich have defended the correspondence, saying it represents no impropriety.

The e-mail controversy was the latest scrutiny to hit the PSC, which angered customers and some lawmakers when it recently announced that Baltimore area consumers will see their bills increase by an estimated $734 a year.

The rate spike is the result of deregulation, approved by the 1999 General Assembly in an effort to spur industry competition. The same year, the Assembly also approved caps that kept rates frozen for the past six years. But with the caps set to expire July 1 and competition yet to be realized, electricity rates have become the Assembly's most pressing concern.

Democrats and some Republicans have accused Ehrlich of failing to act sooner on rate increases. After days of criticism, Ehrlich offered $25 million in a supplemental budget proposal last week to help pay the bills of low-income residents.

Ehrlich has blamed Miller for being the "mastermind" behind deregulation by crafting the 1999 law that approved deregulation and by sitting on the committee of negotiators who came up with a unified version of the deregulation bill.

BGE has been criticized for raising rates while its parent company, Constellation Energy Group, is proposing a $11.5 billion merger with Florida Power and Light Group that could translate into millions in bonuses for Shattuck.

"We're hoping they will bring something to the table," Middleton said. "We're not going to let time work against us. We're moving ahead to find a solution."

kelly.brewington@baltsun.com

Sun reporter David Nitkin contributed to this article.

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