City pursues BGE rate attack

New court filing points to `massive regulatory failure' by PSC


The city of Baltimore bolstered its attack on the Public Service Commission yesterday, accusing it of "massive regulatory failure" when it approved what the city says is a flawed BGE rate increase deferral plan without considering all the facts.

The new filing in Baltimore Circuit Court came hours after the city won another preliminary victory as the Court of Special Appeals denied a request by the PSC and BGE to overturn a lower court ruling.

City Solicitor Ralph Tyler argued in his new brief in Baltimore Circuit Court that the PSC failed to do its job in investigating the need for BGE's pending 72 percent increase for residential electric bills and that it violated its statutory requirements in approving the rate increase deferral plan.

"The PSC refused to hold either a lawful adjudicatory hearing or to engage in lawful rulemaking, and it refused to consider all the relevant facts," Tyler wrote. "Nevertheless, the PSC approved imposing enormous, and for many citizens, literally life threatening 72 percent rate increases. The agency's action cannot stand."

The city is requesting a re-hearing of the deferral plan and wants the judge to order the PSC to allow cross examination, expert witness testimony and consideration of other issues - including executive compensation, BGE profitability and a pending merger between BGE parent Constellation Energy and Florida-based FPL Group Inc.

The deferral plan was designed to help customers cope with the 72 percent increase in BGE electric bills that is expected after the July 1 expiration of rate caps instituted as part of Maryland's 1999 deregulation of the industry.

Gov. Robert L. Ehrlich Jr. negotiated the plan with Constellation officials after legislators failed to act during the General Assembly session. The plan reduces the rate increase on July 1 to 19.4 percent, with further increases over the next 18 months.

Beginning next month, customers would have to pay monthly fees - $19 for the typical ratepayer - for two years. During that time, those who participate in the plan would pay more per month than they would have otherwise. In the end, customers would pay about the same amount either way.

Tyler wrote in his brief that the court must make explicit instructions for the PSC to consider a broader range of issues. If it does, he said, consumers would not have to shoulder so onerous a rate increase.

"The court cannot be subtle with the PSC," Tyler wrote. "Time is short; the need is great, and the PSC cannot be left to its own devices."

The PSC, BGE and any other parties opposed to the city's suit have a week to file responses. Constellation spokesman Robert L. Gould said the deferral plan provides options for customers to handle the rate increase and has nothing to do with the merger or executive compensation.

"All the O'Malley administration is doing is engaging in smoke and mirrors in an effort to win the gubernatorial election at the expense of the BGE customer," Gould said.

PSC spokeswoman Christine E. Nizer could not be reached for comment yesterday after the city filed its order.

The Court of Special Appeals decision issued by Chief Judge Joseph F. Murphy Jr. upholds a circuit court decision that BGE and the PSC cannot advertise the details of the deferral plan until the case is settled.

"We thought it was important that the stay remain in place so that there would not be confusion about the status of this plan," Tyler said. "We are continuing to work toward a result that will lead to a substantially reduced rate."

Many consumers and political leaders - including some members of Ehrlich's own party - say they think the deal is inadequate.

Gould said the company is disappointed by Murphy's ruling.

"This is just another day's delay in communicating the options that our customers will have come July 1," Gould said. "Today's ruling, against the backdrop of all the political rhetoric about whether or not the 72 percent is real, is simply counterproductive, and our customers are the ones that continue to suffer."

Murphy wrote that the PSC and BGE could return to the appellate court if Baltimore Circuit Judge Albert J. Matricciani Jr. denies a specific request from them to issue information to consumers.

Nizer, reached earlier in the day, said the commissioners are disappointed with the ruling because it will prevent them from providing "good and timely" information to customers about utility rates.

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