Leaders dispute news of BGE pact

April 09, 2006|By ANDREW A. GREEN AND KELLY BREWINGTON | ANDREW A. GREEN AND KELLY BREWINGTON,SUN REPORTERS

Talks toward reducing the impact of a 72 percent electricity rate increase coming for BGE customers took a turn for the worse yesterday, with the governor and legislative leaders remaining divided over the fate of the Public Service Commission and offering starkly different accounts of the chances for a deal.

Gov. Robert L. Ehrlich Jr. called Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch to a meeting in his office at noon yesterday but showed up 40 minutes late, after the two lawmakers had given up and left.

Twenty minutes later, Ehrlich, with sleeves rolled up, held a news conference in which he declared that he, Busch and Miller had agreed on a deal. The only remaining obstacle was for them to sell it to the members of their chambers, he said. He did not provide details of an agreement.

"To a very real extent the work between the principals is done," Ehrlich said, referring to himself, Miller and Busch.

Miller called that a "total falsehood."

"The governor didn't show up," said Miller. "The purpose of this meeting was to find out if there is a basis for an agreement. ... I've been here all morning waiting for a meeting."

"The company is saying, `Let them eat cake,' and the governor, he's sleeping in," Miller said. "It's hard to get a deal done when you have participants like that."

Busch also expressed irritation.

"We're down here with 141 members of the House, we're here to pass legislation, some of it that the governor supports," he said wearily. "We've been in here all weekend every weekend for three weeks. He called [for a meeting] knowing we had to make changes to our schedule. "

"The state is in a crisis situation, and he's the one most responsible for resolving the issue," Busch added. "We're here doing everything we can."

With lawmakers taking today off, a resolution on electricity rates - if it comes at all - would occur on the frenzied final day of the General Assembly session.

Yesterday was hardly the first time in the past four years that negotiations among the three top leaders in Annapolis have broken down. Talks over slot machines, medical malpractice reform and other issues have frequently ended with the three giving widely divergent accounts of their meetings.

But the stakes have perhaps never been higher. With the rate caps instituted as part of the deregulation of Maryland's electric industry due to expire June 30, BGE's 1.2 million customers are facing a $743 average annual increase in their bills.

This year's General Assembly session ends at midnight tomorrow, and the failure to find a solution by then could be a major loss for consumers, lawmakers and - if the legislature overrides Ehrlich's vetoes of bills aimed at BGE - the utility company.

Officials at BGE's corporate parent, Constellation Energy, have offered a plan that would limit the increase on July 1 to 15 percent and then bring customers up to market rates over 18 months. The company would issue debt to cover the deferred charges and levy a $8.54 a month fee on customers to repay them over eight years. The company would cover the interest. The total value of its offer is $375 million.

As part of the deal, Constellation has demanded that the legislature let stand Ehrlich's vetoes of a bill that would appoint a special counsel to investigate the pending merger between Constellation and a Florida utility and give the General Assembly veto power over the deal. The company also wants vetoed bills that would fire the five members of the Public Service Commission and require Constellation to return $528 million it received as part of the 1999 deregulation bill to remain dead.

On Friday night, Miller and Busch were close to an agreement on a plan that would limit the first year's rate increase to about 15 percent, with a similar increase 12 months later. Prices would rise to market rates over two or three years, and customers would pay off bonds over 10 years. The legislators' plan would cost the company about $600 million.

Company spokesman Robert L. Gould said yesterday that Constellation has not seen a detailed plan from the legislature.

Ehrlich said a meeting between legislators, the administration and company officials is set for 7:30 tomorrow morning.

Besides money, one major issue remains: the fate of the Public Service Commission.

The PSC, whose members are appointed by the governor, has been subject to intense criticism from legislators and the public for being too close to the utilities. But Ehrlich has said he sees the PSC bill - which would give the legislature control of the body - as a power grab and one that would inject harmful uncertainty into the state's regulatory environment.

The commission sued last week in Talbot County Circuit Court to block the implementation of the bill and won a temporary restraining order. The state attorney general's office is appealing the decision.

"The bill has to die, and that's simply part of the negotiations," Ehrlich said.

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