Legislators struggle to reach a deal for electric rate relief

Energy

April 08, 2006|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

Negotiators in Annapolis appeared to be nearing a deal on lowering electric rates for more than a million BGE customers yesterday as a Maryland judge blocked the legislature from ousting members of the state Public Service Commission, who have become a major sticking point in the talks.

Participants in the discussions say that legislators have settled on a rate relief package for consumers with a structure that is nearly identical to the plan Constellation Energy executives offered last week and that lawmakers and company officials are $225 million apart in their proposed package.

Constellation officials have said they can afford no more than $375 million in concessions, and legislators demanded concessions worth at least $600 million, down from $750 million. Rates for BGE customers are scheduled to rise 72 percent in July.

The deal is beginning to coalesce as the 90-day Assembly session enters its final frantic hours, and lawmakers must decide whether to override several utility-related bills vetoed yesterday by Gov. Robert L. Ehrlich Jr. The bills were designed to give leverage to lawmakers in their talks with the power company, and override votes would show that those talks have collapsed.

"There is no reason this can't get done by sine die," Ehrlich said yesterday, referring to the final day of the General Assembly session, which is Monday. "If it doesn't get done by sine die, everyone is going to have to stay here until it's done."

That would mean a special session of the legislature, a possibility that legislative leaders have also raised. But with lawmakers eager to return to their districts in an election year, there is expected to be intense pressure to negotiate a settlement in the next three days to avoid staying in Annapolis any longer.

Beyond the difference in dollars, the two sides are at odds over the state Public Service Commission, which has been accused by critics of siding with business and not doing enough to protect consumers.

Legislative leaders insist they want oversight of a proposed merger between Constellation and FPL Group Inc. of Florida in the hands of someone other than the current commission, but utility officials say the replacement of the members is a deal-breaker.

The Assembly passed a bill to replace members of the commission with its own appointees, but the effort was dealt two setbacks yesterday. Ehrlich vetoed a bill to fire the five appointees, and a Talbot County Circuit Court judge issued a temporary restraining order that would prevent the law from taking effect.

The legal ruling comes a day after commission Chairman Kenneth D. Schisler sued in his home county, saying the measure is unconstitutional. The state has said it will appeal the decision.

Senate President Thomas V. Mike Miller said legislators remain "very perturbed" about the members of the commission.

"We have the votes in both the House and the Senate to appoint a new PSC, and that's a major sticking point," Miller said.

Constellation spokesman Robert L. Gould said yesterday that the company would rescind its offer if the legislature overrides Ehrlich on the PSC bill or two others the governor rejected yesterday.

Ehrlich also vetoed measures that would appoint a special counsel to investigate the merger and give the General Assembly veto power over the deal, and force Constellation to return $528 million it received to compensate it for the anticipated decline in value of its power plants, which did not occur.

Gould said the company has not seen the details of the lawmakers' latest proposal, but he said officials are cautiously optimistic.

"They're moving in the right direction," he said. "The mechanics of what we're hearing are very similar to what we had put forward as part of our proposals, so it's simply a difference on the dollars."

The legislators' plan would involve an initial increase of roughly 15 percent to 18 percent in July, with rates held steady for a year. Other increases would follow to bring customer bills up to market rates over two to three years. BGE would issue bonds to cover the deferred costs, which would be paid off with fees on customer bills spread over 10 years.

The governor met with Miller and House Speaker Michael E. Busch yesterday and said afterward that a framework is in place for a deal but that more negotiation needs to take place.

"I will not allow myself to say I'm overly optimistic," Ehrlich said. "But I am more optimistic at this minute than I was this morning."

No representatives of BGE or Constellation Energy attended the meeting.

The governor declined to give details of the negotiations, but his comments suggested that he intends to work with legislators to negotiate a settlement. He has previously said he could solve the problem on his own, along with his appointees on the Public Service Commission, but yesterday he indicated he intends to find a settlement before the General Assembly adjourns.

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