Opportunity lost

April 21, 2006

The manicured lawn of the Governor's Mansion provided a lovely backdrop yesterday for Gov. Robert L. Ehrlich Jr. to claim a big political victory by announcing an agreement on electricity rate relief with Baltimore Gas and Electric's parent, Constellation Energy Group - an agreement that eluded the state legislature.

But despite the sunny scene, the deal is not nearly as good as the governor touted it to be - at times using some very fuzzy math.

Mr. Ehrlich claimed the deal would provide about $1.2 billion in outright benefits to BGE customers, a figure with which even the utility couldn't agree.

In fact, the company is providing only about half that, $600 million, in discounts - or $45 per household per year for 10 years.

And that's only if Constellation's merger with Florida's FPL Group is approved by the state Public Service Commission and federal bodies. (Did Constellation need any more leverage before a PSC that has proved itself much too industry-friendly?)

The rest of the money, about $588 million to pay for 18 months of rate-increase partial deferrals, would ultimately and largely come from the pockets of customers who opt for the deferrals.

BGE customers should ask if it's worth it even to bother with this program.

Based on the company's estimates, participating customers would save money for the first year. But after that, it appears they'd be paying slightly more than those who didn't opt in. Over three years, customers would pay roughly the same amount whether they participate or not.

So that is what all the weeks of intense political negotiations - all the hard work of poring over spreadsheets, as Mr. Ehrlich boasted yesterday - have come to? Little overall savings from the partial deferrals of rate increases for 18 months. After that, customers will face the full electricity rate increase - plus continuing repayments of the partially deferred increases. Moreover, Constellation's merger plans appear headed for a light PSC review.

The deal is bad enough that House Speaker Michael E. Busch wouldn't rule out the legislature initiating a special session to regain leverage over Constellation and seek more favorable terms. But he quickly acknowledged that would be pointless unless Senate President Thomas V. Mike Miller would come to an agreement.

And as has been the case with Mr. Miller since the last night of the legislature, he was absent without explanation.

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