Rate Deal Reached

Those who opt in would see 19% increase this year

Ehrlich opponents criticize his proposal as insufficient

Electricity plans emerge as major campaign issue

Politics

April 21, 2006|By DAVID NITKIN | DAVID NITKIN,SUN REPORTER

A politician who wants to be elected governor of Maryland needs an aggressive plan for wrestling down electricity costs and must be ready to rip into opponents' suggestions for helping consumers.

That reality was clear yesterday as the question of how to handle a looming 72 percent average price increase for BGE's residential customers dominated the debate in the increasingly nasty gubernatorial race.

Gov. Robert L. Ehrlich Jr., trailing in the polls, unveiled the result of his negotiations with BGE parent Constellation Energy Group, saying he had struck a deal that includes a 19 percent rise in July, a 25 percent increase about a year later and market rates eventually. The first rate increase would come just months before the Republican stands for re-election and, while significant, would be far less than a rise all at once.

The agreement must be approved by the Maryland Public Service Commission, which regulates utilities.

His principal Democratic foes were not impressed.

Baltimore Mayor Martin O'Malley's campaign promptly issued a statement criticizing the Ehrlich plan as a "loan shark deal" that would cost consumers "more in the long run."

The mayor released his own energy proposal yesterday that includes a "shock absorber" to buffer consumers from higher bills and a call to reconstitute the PSC, which he has derided as overly friendly to Baltimore Gas and Electric Co.

Not to be outdone, Montgomery County Executive Douglas M. Duncan came to Baltimore to personally petition state regulators to roll back price increases of 40 percent for Washington-area PEPCO customers. The plans proposed by the mayor and the governor are flawed, Duncan said later in a statement, because both officials are "way too close to the energy companies and their executives to fight for the hard-working men and women in Maryland."

Little-discussed until a few weeks ago, the impending electricity rate increase -- the byproduct of an industry deregulation plan adopted by lawmakers in 1999 -- has become the most talked-about topic of the political season.

Three out of four Maryland voters say they are "very concerned" about rate increases for electricity, said Annapolis-based independent pollster Patrick Gonzales, whose Gonzales Research & Marketing Strategies conducted an opinion poll released this week.

"It affects everyone, because everyone pays an electric bill in one form or another," Gonzales said. "Beyond that, the sheer magnitude of the increase makes everybody nervous. That's why politicians are in a reactive mode."

Ehrlich and his challengers have rightly shifted their attention to electricity and away from issues such as public schools and the environment, Gonzales said, because "if you don't deal with it, it looks like you're disengaged, and that's the worst position for any candidate to be in."

Rates are rising because caps imposed six years ago are coming off. Lawmakers who passed the deregulation plan envisioned the caps as a way to ease the transition to a competitive energy market. But energy costs have increased sharply since then because of a variety of factors, including unsettled politics in oil-producing regions and increased demand among rising economies such as China's.

News of the increase hit during the 90-day legislative session, and Maryland lawmakers scrambled to find a solution. But the General Assembly adjourned April 10 without reaching a deal, leaving Ehrlich as the lone negotiator with the potential to emerge as a problem-solver.

The Gonzales poll shows that voters are not blaming the governor for the rate increases. Asked who is "most responsible," four in 10 voters who responded said Constellation is at fault, while about one in three said it is the General Assembly's responsibility. Twelve percent said the governor deserves the blame.

Gonzales said he was surprised by the result, calling it "good news" for Ehrlich, "because it puts him in a position of having credibility to negotiate."

If voters accept the plan released yesterday by the governor as a legitimate solution, the electricity issue could fade as an election-year topic, said Richard E. Vatz, a Towson University professor who teaches a class on political persuasion at which Ehrlich speaks regularly. (The governor was a guest lecturer yesterday.)

Decades' worth of polling information indicates that decisive action by political leaders "improves their approval rating," Vatz said.

"If the public perceives that the deal that Ehrlich effects is a reasonable deal, given what he has to deal with, I think the issue goes away," Vatz said. "If the public believes he got snookered, then you have an issue that endures until the election."

Both Duncan and O'Malley believe that voters will be talking about electricity rates for months, even if consumers pay only a frac- tion of the 72 percent increase in July.

"This cuts to the core of whether the governor of Maryland is on the side of working families or is on the side of big energy companies," O'Malley said.

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