`Regulation with blinders'

May 12, 2006

For the time being, a judge's order barring Baltimore Gas and Electric Co. from publicizing its plan to defer part of a 72 percent increase in customers' electricity bills may make a very confusing situation even cloudier. But that is only the unfortunate byproduct of a very important legal effort by the city of Baltimore to force the state Public Service Commission to reconsider this rate increase plan - this time taking into account the critical but so far unasked question of whether the utility and its parent, Constellation Energy Group, can absorb a bigger chunk of the higher electricity costs.

Put simply, the industry-friendly PSC so badly failed its responsibilities to Marylanders when it approved the rate increase phase-in that it should be forced to hear the matter again - this time without commissioners' heads in the sand.

In its April 27 hearing on the deferral plan agreed upon by Gov. Robert L. Ehrlich Jr. and BGE, the PSC refused to look at the utility's cost structure and profit margins or Constellation's executive compensation and merger plans with Florida's FPL Group. Cross-examination of those who testified wasn't allowed. Commissioners then met right after the four-hour hearing and approved the plan.

As we said then, the PSC appeared to use a rubber stamp that had already been well inked. Or as City Solicitor Ralph S. Tyler put it yesterday: "The PSC organized its proceedings in such a way as to make itself powerless. It assumed that all these other factors couldn't be considered. ... It was regulation with blinders."

Mr. Tyler wants to force the PSC to do its job - to examine, among several matters, the financial benefits of Constellation's merger plans with an eye toward seeing if more of the largess could flow toward BGE's ratepayers, who built the utility over more than a century. Baltimore Circuit Judge Albert J. Matricciani Jr.'s issuance of a stay Wednesday was the first step. Persuading the judge in hearings before the end of this month to send the plan back to the PSC for more thorough reconsideration is the next.

That may be messy, given that higher electric rates are supposed to hit July 1, but it's necessary. There is, of course, an element of politics here, given Baltimore Mayor Martin O'Malley's run for governor. But the PSC has not fulfilled its core responsibility of serving the public interest, and e-mails between a lobbyist and PSC Chairman Kenneth D. Schisler have shown him to be an industry toady. In the course of conferring with Governor Ehrlich on this issue, the PSC even managed to break state open-meeting laws. If it takes a judge to make the PSC represent the public interest, so be it.

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