Mayor files suit over rate rise deferral plan

Officials seek judicial review of state's proposal on BGE's 72% spike in bills

May 03, 2006|By JOHN FRITZE | JOHN FRITZE,SUN REPORTER

Baltimore Mayor Martin O'Malley took the debate over proposed electricity rate increases to court yesterday, following through on a promise to challenge the state's plan to defer a 72 percent spike in bills.

In motions filed in Baltimore City Circuit Court yesterday, city officials requested judicial review of the deferral proposal -- which would phase in rate increases over 18 months -- and demanded that BGE delay an expected publicity campaign on the plan.

The Public Service Commission approved the deferral plan last week and said BGE could begin enrolling customers this month, in advance of the July 1 rate spike. A spokesman for the company said it expects to start notifying customers of the phase-in option this week.

But many Democratic critics, including O'Malley, have said the plan, which was crafted by Republican Gov. Robert L. Ehrlich Jr., does not go far enough to deal with the rate increases.

In its lawsuit yesterday, Baltimore officials contend the PSC "changed rules mid-stream," because it allowed parties to cross-examine witnesses at one hearing but did not follow the same procedure later when the city raised questions about how BGE arrived at its estimated 72 percent increase.

Officials also pointed to a filing this week by BGE that requested greater flexibility to impose a 5 percent interest charge. The PSC ruled that the interest could not be immediately included on bills.

"Simply put, BGE has no right to further confuse and anger an already confused and angry public," O'Malley said in a statement. "Since the utility-friendly Public Service Commission won't do its job, we are forced to take this matter to the independent judiciary."

Although state utility law provides that parties may conduct a cross-examination, it also states that the Public Service Commission is not bound by the rules of evidence or regular court procedures.

PSC spokeswoman Christine E. Nizer declined to comment on the city's lawsuit because, she said, commissioners had not had the opportunity to review it.

The expected rise in electricity rates -- a product of deregulation legislation approved in 1999 -- has become a political issue. O'Malley, who is seeking the Democratic nomination for governor, has been one of the most outspoken critics of the plan.

Under the deferral plan, customers who choose to enroll would see rates rise 19.4 percent in July, followed by a 5 percent increase in January 2007, a 25 percent increase in June 2007 and a subsequent rise to market prices in January 2008. Customers would be charged a monthly fee -- $19 a month on average -- to repay the principal and interest.

Robert L. Gould, a spokesman for Constellation Energy Group, BGE's parent, also declined to comment on the suit directly. Gould said the company is moving forward with an effort to educate customers about the deferral option with automated calls and mailings. That outreach, he said, could begin this week.

john.fritze@baltsun.com

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