`Opt in' for rate break

Ehrlich weighs proposal for easing impact of electricity increase

April 15, 2006|By JENNIFER SKALKA | JENNIFER SKALKA,SUN REPORTER

Gov. Robert L. Ehrlich Jr. is considering a new plan to mitigate a looming 72 percent increase in electric rates under a program that would require ratepayers to explicitly choose to participate - a provision that opponents fear might unfairly affect the poor and elderly.

Ehrlich and House Speaker Michael E. Busch met yesterday behind closed doors in Annapolis, with Busch emerging from the session saying "this is the best alternative he can come up with."

"It's not as beneficial to ratepayers as the one that we could've passed during the session, but unfortunately that didn't take place and the governor has to look to alternatives," Busch said.

After the meeting, Ehrlich declined to take questions from reporters.

But James C. "Chip" DiPaula Jr., the governor's chief of staff, later said the pending proposal includes "several hundred million" in money borrowed by Baltimore Gas and Electric Co. and would require participating ratepayers to contribute about $3 monthly - double the amount offered in the plan the Senate balked at passing last week.

The July 1 rate increases would be held to 15 percent for the first year for those who choose to participate. Individuals who do not sign on would see their rates go up considerably more, though the amount would be less than the previously announced 72 percent increase. The final percentage would depend on the contribution from BGE and its parent, Constellation Energy, which could be as much as $600 million, according to DiPaula.

When a plan to temper rate increases failed in the Senate just minutes before the end of the General Assembly session Monday night, Ehrlich said he was strongly considering convening a special session of the legislature. He now appears to be turning away from that option.

"We had our chance," DiPaula said. "We had 90 days to resolve it during the session. The governor appreciates the House's action and is disappointed it failed to move in the Senate."

Details of how ratepayers would "opt in" to the program remain unclear. Busch and others expressed worry that some people might not understand that to get the rate relief they would have to notify BGE, which serves about 1.1 million people.

"This sounds like an awful plan," said Tom Hucker, executive director of Progressive Maryland. "And it sounds like it's certainly going to be the hardest on low-income and disabled Marylanders who won't find out all their options."

Clare Whitbeck, legislative vice president for United Seniors of Maryland, said it's unreasonable to require senior citizens to take action in order to receive lower utility rates.

"Whose side is the governor on?" Whitbeck asked.

Under an earlier plan approved by the Public Service Commission, residential customers would have come under the phased-in rate relief unless they specifically "opted out."

DiPaula said the governor is committed to providing all ratepayers with relief and "remains most concerned with those on limited and fixed incomes."

"With an opt-in program, it would be important to have an aggressive marketing and education program so that all consumers, regardless of their means, would be well-informed and be able to make the appropriate decision to address their particular needs," DiPaula said.

The debate over utility rate increases - the result of a scheduled lifting of BGE residential rate caps instituted as part of a deregulation plan for Maryland's electric power industry - consumed much of the General Assembly session.

Lawmakers, as well as Ehrlich, were hoping to launch their re-election bids in the subsequent days. Instead, they're contending with a complicated problem that is compounded by steeply rising energy costs around the world, a development not anticipated when lawmakers approved deregulation in 1999.

An earlier potential solution, which would have been financed by a $600 million contribution from Constellation Energy, failed on a procedural vote in the Senate near midnight Monday, the session's end.

Under that proposal, a $1.50 fee would have been added to monthly bills, which would have increased by 15 percent July 1 instead of 72 percent - with future increases being phased in over several years.

Busch said the company is in no hurry to work again with lawmakers. "I think Constellation is a little leery after their first legislative experience about being involved in any kind of legislative process again," he said.

Senate President Thomas V. Mike Miller could not be reached for comment yesterday.

Donald F. Norris, professor of public policy at the University of Maryland, Baltimore County, said that if Ehrlich manages to hash out a plan that truly benefits ratepayers, he'll do wonders for his campaign credibility.

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