Duncan pushes power plan

Re-regulation, caps on rates urged for electricity industry

April 18, 2006|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

Montgomery County Executive Douglas M. Duncan called yesterday for rate caps on Maryland electricity rates and re-regulation of the industry - staking out the most aggressive position of the three candidates for governor in what could be a defining issue in the coming election.

Speaking outside the Baltimore headquarters of Constellation Energy, BGE's parent company, Duncan said the legislature should come back in a special session to address the 72 percent increase looming for BGE customers.

Gov. Robert L. Ehrlich Jr. has said he will seek to avoid a special session. Mayor Martin O'Malley, Duncan's Democratic primary opponent, hasn't taken a stand on a special session.

"Bob Ehrlich doesn't want to talk about re-regulating the energy industry," Duncan said. "Martin O'Malley doesn't want to take on the big energy companies. They're not willing to do anything to offend their big donors."

BGE's residential rates are set to rise by 72 percent July 1 when rate caps instituted six years ago as part of Maryland's deregulation plan expire.

Several members of the legislature - Democrats and Republicans - called for re-regulation during the General Assembly session, but those proposals were discarded in the ultimately unsuccessful effort to enact a negotiated agreement with BGE to spread the increase over several years.

Few states have tried to re-regulate their electric utilities; industry analysts say such a move would be difficult and might not result in lower rates for customers.

About half of the states deregulated their electric industries in the 1990s on the premise that competition would lead to lower prices for consumers. But competition has not developed in most states, Maryland included.

Industry watchers say Arkansas and New Mexico have re-regulated, and California - the site of price shocks and rolling blackouts a few years ago - has partially re-regulated.

Going back to a regulated system would be difficult but not impossible for Maryland, said Richard Sedano, director of the Regulatory Assistance Project, an energy policy think tank in Vermont.

"A utility is a public service company, and if the legislature decides to change the task of the company, they can do that," Sedano said. "Hopefully, they won't do it willy-nilly and they won't do it that often."

During the General Assembly session that ended last week, Ehrlich and legislative leaders focused on measures to alleviate the state's short-term problems rather than seeking broad-ranging reform of the industry.

Government and Constellation officials negotiated a $600 million commitment from the company that would have limited the initial increase to 15 percent and spread the transition to market rates over three years. The plan died in the Senate minutes before the General Assembly adjourned for the year amid concerns about Constellation's pending merger with a Florida utility.

Ehrlich and company officials have held more talks since the session ended. Both sides said yesterday that talks are continuing, but that they have not reached an agreement.

Duncan said his plan is the only one that would reduce the amount Marylanders would have to spend on electricity rather than just spreading the increase over several years.

"A 72 percent rate hike should not be allowed to stand now or in the future," Duncan said. "Allowing a 72 percent rate increase to come into effect over time is like having a tooth removed bit by bit over several trips to the dentist."

Ehrlich spokeswoman Shareese N. DeLeaver said the governor, who said last week that he wants a task force to look at electricity issues, including re-regulation, "welcomes the county executive's thoughts on the issue."

"Governor Ehrlich continues to work with BGE, the legislature and all interested parties to mitigate electric rate increases for Maryland's working families," DeLeaver said. "From the beginning, Governor Ehrlich has been working with interested parties on short- and long-term plans."

O'Malley has been active in the rates issue largely through criticism of the Public Service Commission, which is controlled by Ehrlich appointees and has been accused of having a pro-industry bias. O'Malley supporters delivered to Ehrlich a petition with 4,500 signatures calling on PSC Chairman Kenneth D. Schisler to resign and urging Ehrlich to use Constellation's proposed merger as leverage in negotiations.

"If he'd been paying attention, Mr. Duncan would have realized that this isn't about credit or blame but actually making a real impact in the lives of Maryland families and small-business owners," said Hari Sevugan, an O'Malley campaign spokesman. "Martin O'Malley has stood firm against Bob Ehrlich's Public Service Commission and their attempt to impose a 72 percent rate hike on Marylanders."

Sevugan said O'Malley would be releasing a comprehensive energy plan in coming days.

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