Numbers differ on electricity rate plan

Amid customer confusion, Ehrlich, BGE vary slightly on fees, increases, interest

April 27, 2006|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

The jumble of numbers that is confounding customers of Maryland's largest utility grew more confusing yesterday, after Constellation Energy Group officials acknowledged that a key figure used by state officials in announcing a rate-relief plan was misstated.

Gov. Robert L. Ehrlich Jr. said last week that the average fee for enrolling in a plan that would phase in BGE's average 72 percent increase in electricity rates for residential customers would be $15 a month. But Constellation, BGE's parent company, has said in advertisements and interviews that the charge is $19.

The governor's office is standing by its numbers, but Constellation spokesman Robert L. Gould said the Ehrlich administration "did some double-counting" of a credit being offered by the company. "There was no intent [to mislead] on their part," he said.

With confusion mounting, the Public Service Commission is to conduct a public hearing today on the proposal. The regulatory agency could sign off on the plan at the end of the meeting.

In an effort to bring clarity to the complex deal, Maryland Attorney General J. Joseph Curran Jr. said yesterday that he has asked Constellation to stop saying in advertisements that the deferral plan would "reduce" the amount of the rate increase that takes effect July 1. People who opt in would actually pay slightly more than if they elect not to participate.

"I think people really ought to have the full facts that there really is no reduction," Curran said yesterday. Constellation officials are taking his concerns under advisement, he said.

The difference between the governor's explanation and the company's calculation of the monthly fee amounts to an additional $28 over seven months for those enrolled in the plan.

While the dollars are not large, the discrepancy is just one more element facing 1.2 million customers of BGE who must decide in coming weeks whether to enroll in the plan. Lawmakers and other consumer advocates say that many Marylanders have no idea what to do.

"They're confused, and they're very angry about the whole thing," said Del. Patrick L. McDonough, a Baltimore County Republican who has fielded a steady stream of calls on the topic on a radio show he hosts. "They're not happy with the current plan at all. They believe that the governor and the legislature both have let them down, and they certainly don't trust BG&E."

The monthly fee for enrolling in the plan is only one of the elements that has come under question. Others include:

Interest: The governor initially said customers would not be charged interest if they wanted to defer higher payments, but Constellation officials say that interest - about 5 percent annually - is part of the monthly charge.

Increases: The deferral plan calls for a 19 percent rate increase in July and a 25 percent increase in June 2007. But neither the governor's office in its announcement nor Constellation in advertisements mentioned an additional 5 percent increase scheduled for January 2007. State officials and the company say the increase would be offset by savings from a proposed merger between Constellation and Florida-based FPL Group, but Curran wants the increase noted in future ads.

Value: Ehrlich said the company has "put $1.2 billion on the table" in the deferral deal. But $588 million of that is money that customers would have to pay back with interest, and the company says it might borrow far less based on the number of expected enrollees.

Variability: Neither Ehrlich nor Constellation explained that the monthly fee will vary based on the amount of electricity a customer uses. Customers whose monthly bills are higher than the median bill of $67 would pay a proportionally larger fee, and people whose bills are lower would pay less. That detail is included in Constellation's filings with the PSC.

Ehrlich's chief of staff and head utilities negotiator James C. "Chip" DiPaula Jr. defended the administration's explanation of the program, developed to help customers cope with a transition to market rates envisioned in a deregulation bill approved by the General Assembly in 1999.

The Public Service Commission capped rates for six years in hopes that competition would develop. The caps are coming off this summer, and BGE says electricity prices will rise 72 percent based on market value.

Although Ehrlich called the monthly fee $15, a handout that the administration gave to the news media referred to the fee on one page as "$19/$15," DiPaula noted. The handout included no explanation for why two numbers were given for the fee.

"We took great pains to make sure all this would stand up under deserved scrutiny," DiPaula said. "The administration is committed to explaining this, working through this."

After consulting with Constellation officials, DiPaula said yesterday that the fee would, effectively, be $19 per month between June 2007 and January 2008, when the charge is in place but prices are not yet at full market value.

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