Veto-proof majorities

Measures would fire PSC, recoup BGE's $528 million

General Assembly

April 01, 2006|By KELLY BREWINGTON | KELLY BREWINGTON,SUN REPORTER

The General Assembly voted yesterday to fire the five members of the state Public Service Commission and replace them with regulators predominantly selected by lawmakers, a critical piece of legislation designed to persuade utility executives to soften the blow of a steep rate increase for Baltimore Gas and Electric Co.'s customers this summer.

Scrambling to meet a key deadline, the Assembly also passed a bill to force Constellation Energy Group, the parent company of BGE, to return to its customers $528 million in payments it collected from customers as part of a deregulation plan.

But the passage of the bills came the same day that Constellation executives told the governor and key lawmakers that the company would not offer relief to customers if the measures become law.

With the bills passed yesterday and a measure adopted Thursday giving lawmakers the power to block a proposed $11.4 billion merger between Constellation and Florida's FPL Group, Assembly leaders say they have created leverage in the hopes of securing better rates for consumers.

While Gov. Robert L. Ehrlich Jr. has hinted that he will veto the measures, the legislation's fate will depend on a final round of negotiations next week.

Some lawmakers speculated that the governor might hold off vetoes until after talks with utility executives early next week, reducing the time available to broker a solution.

The governor must make his decisions before next Saturday, and the Assembly could override his action if lawmakers determine that the utility company has not made enough concessions by April 10 - when lawmakers adjourn for the year.

Yesterday's legislation was passed by veto-proof majorities in both chambers and with bipartisan support.

For now, the players are not revealing much, saying only that progress is being made.

"We won't know anything about the bills until the end of next week," said Del. Dereck E. Davis, a Democrat from Prince George's County who has attended the meetings. "But we are going to continue to work hard to negotiate until we reach a solution."

Company opposition

Utility company executives, however, continued to insist that the bills must be overturned.

"We've made clear all along that it is the merger that enables Constellation Energy and BGE to be able to put forth a meaningful financial solution for the benefit of the ratepayers," Constellation spokesman Robert L. Gould said after the meeting yesterday.

"So, of course, it would be counter-productive for these measures to be enacted into law."

Yesterday Constellation officials upped an earlier offer of rate relief, saying they would provide a total of $375 million for customers coping with higher bills, an increase from a $354 million package earlier in the week.

But lawmakers had asked for $750 million, company officials said.

"To suggest that Constellation Energy and BGE would pay $750 million is outrageous," Gould said.

The company's plan includes a phase-in rate schedule - an initial 15 percent July 1, followed next January by a 4.5 percent increase and 20 percent next June. But it hinges upon the rejection of the Assembly's legislation.

Electric rates for BGE's 1.2 million residential customers are set to go up July 1 by an annual average of $743 per household, at the end of a six-year rate freeze.

The rate caps were part of a utility deregulation plan approved by the General Assembly and other government officials in 1999 and 2000.

In a marathon session, the House of Delegates gave final passage to a bill to recoup an estimated $528 million that customers paid Constellation in anticipation that its power plants would decrease in value.

Opponents of the measure tried to attach a string of amendments, including one that would decrease the sum by a third, saying the figure more accurately represents what the utility owes customers.

"If we push Constellation, we are going to financially harm the merger, which will end up impacting the ratepayers of BGE," said Del. Warren E. Miller, a Republican who represents Carroll and Howard counties.

The amendments failed.

Del. Patrick L. McDonough, a Baltimore County Republican, said the amendments were designed to produce fear of BGE insolvency.

"Boo!" he said, stirring the House chamber. "That's what this is - scare tactics. It's scare tactics to believe if we produce a fair consumer rate, the executives at BGE will roam the streets like the homeless. But ladies and gentlemen, it ain't gonna happen."

A bill that would effectively fire the five current members of the Public Service Commission and replace them with a board controlled by the legislature won final passage yesterday, with veto-proof majorities in both chambers.

Voting on that bill fell more closely along party lines than other BGE-related bills, with Republicans calling it a power grab designed to embarrass the governor, not help ratepayers.

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