Maryland needs new PSC to protect public interest

May 19, 2006|By EDWIN D. HILL

WASHINGTON -- Before utility industry deregulation reared its ugly head, rate increases and merger proposals were aired in the public arena. Sadly, the process has lost much of its transparency, and the consumers, workers and the industry itself are worse off for it.

With two energy corporations, Constellation Energy Group and Florida-based FPL Group, proposing a merger that would create the second-largest utility in the United States, the need for careful public scrutiny never has been greater.

The International Brotherhood of Electrical Workers has intervened in the proposed Constellation-FPL merger to ensure it is in the public interest, and the latest developments leave us deeply concerned about the ability of the current Maryland Public Service Commission to serve as a fair arbiter in the process.

This PSC, four out of five of whose members were appointed by Gov. Robert L. Ehrlich Jr., appears to be uncomfortably close to the industry, especially given the recent revelations about PSC Chairman Kenneth D. Schisler's close ties with top utility company lobbyist Carville Collins. Recently released e-mails between Mr. Schisler and Mr. Collins show that industry insiders were "coaching" the chairman on his communications with legislators and conferring with him on the firing of PSC personnel.

Just as distressing are revelations contained in public documents that Constellation CEO Mayo A. Shattuck III and other company officials stand to gain tens of millions of dollars as a result of the merger with FPL.

A judge recently agreed to allow the IBEW and Baltimore to review documents on Constellation executive compensation on a confidential basis, but the company is adamant in refusing to allow this information to be made public. The question is, what are they so desperately trying to hide?

Top Maryland legislative leaders also want to know how much money Constellation's executives would get from a merger with FPL.

There's something wrong with this brave new deregulated system when utility executives reap astronomic benefits at the same time consumers face staggering rate increases. This is exactly the kind of scenario that our union and other opponents warned against when Maryland enacted utility deregulation in 1999. Unfortunately, those warnings were ignored, and the citizens of Maryland are paying the price.

The proposed Constellation-FPL merger would create a company of such vast size that it would have been disallowed under the Public Utility Holding Company Act, which Congress repealed last year with assurances that any future merger deals would face vigorous federal scrutiny.

While we are awaiting review by the Federal Energy Regulatory Commission, it appears that the Maryland PSC is prepared to rush through such oversight. The commission has set a new compressed schedule that limits the ability of interested parties to weigh in and shortens the decision-making process by about a month.

The merits and impact of the merger should not be prejudged. But one thing is certain: The PSC's decision to shorten the deliberation, at the same time that it approved the Ehrlich rate increase plan - in secret session without public debate - is evidence that the system in Maryland is fatally flawed.

Under the Ehrlich plan, customers of Baltimore Gas and Electric would still be hit with the widely publicized rate increase of 72 percent, with the option to defer the shock by taking a loan from the utility that would have to be paid back over time.

Whether the state should examine re-regulating the industry, as many have urged, is a question that has no easy answer and would take time to work through. But Maryland lawmakers can and should move immediately to ensure the critically important independence of the PSC.

We have urged Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch to call a special General Assembly session to review the sweetheart rate deal and pass new legislation to create a PSC that looks out for the broad public interest on all utility matters.

In the recently ended session, Governor Ehrlich vetoed a bill that provided that two members of the PSC be appointed by the House of Delegates, two by the Senate and one by the governor, instead of all by the governor, as is the current system. A new version of that bill is needed to ensure that Marylanders are properly represented and get the fair-minded oversight of utilities that they need and deserve.

Edwin D. Hill is president of the International Brotherhood of Electrical Workers. His e-mail is IP_edhill@ibew.org.

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