PSC reverts to March plan

BGE customers, who would have to opt out, will save less under it than under Ehrlich's proposal

June 03, 2006|By PAUL ADAMS | PAUL ADAMS,SUN REPORTER

State utility regulators said yesterday that a judge's order striking down a plan to defer part of a 72 percent rate increase for residential electricity customers has forced them to at least temporarily revive an earlier plan that includes a smaller rate cut and interest charges.

The decision will mean less savings for Baltimore Gas and Electric Co. customers come July than they would have received under a deferral plan hashed out between Gov. Robert L. Ehrlich Jr. and the utility after lawmakers failed to pass legislation dealing with the issue. Consumers will be automatically enrolled in the plan unless they call BGE and opt out.

The order by the state Public Service Commission is the latest turn in a debate over electric rates and deregulation that has angered and confused consumers. BGE customers are still waiting to know exactly how much they will be paying for electricity when rate caps that have been in place for six years expire at the end of this month. The issue has sparked lawsuits and countersuits and become the focus of a political tug of war between the governor and his opponents in the coming election season.

Baltimore officials successfully sued last month to stop the governor's plan in hopes of getting a better deal. A Baltimore City Circuit Court judge sided with the city on May 30 and ordered the PSC, which regulates utilities, to hold new hearings to investigate more deeply into whether the rate increase is justified.

But while that process plays out in coming weeks, the PSC, in a 4-1 vote, said it would be unconstitutional for regulators to deny BGE the ability to recover its cost to provide electricity.

The commission said the court's decision left it little choice but to revert back to a rate plan it had approved March 6.

That order - which phased the higher rates in over two years and charged 5 percent interest - was widely criticized by lawmakers and consumer advocates at that time as being too harsh, leading to months of rancorous debate during the recently concluded legislative session.

Yesterday's PSC announcement was immediately criticized by city officials, lawmakers and consumer groups, who say the commission did not consider alternatives that would be more favorable to consumers.

Critics also said the commission based its analysis on a flawed interpretation of the law - a contention that was bolstered by the state attorney general's office yesterday.

"The Public Service Commission has taken the most anti-consumer position it could find and the most punitive to consumers," said Baltimore City Solicitor Ralph S. Tyler, whose lawsuit against the commission prompted the judge's order. "You can't read this order as anything other than their whining about being reversed."

Ehrlich blamed Mayor Martin O'Malley's administration yesterday for saddling BGE customers with bigger electric bills as a result of its lawsuit.

Ehrlich appointed four of the five members on the PSC, which O'Malley and others have criticized as being too close with the power industry it regulates.

"Today's developments demonstrate why naive, politically tinged lawsuits should never come before the interests of working families," Ehrlich said in a statement. "Regrettably, the city's lawsuit has put working families in a far worse position."

Compliance vowed

Rob Gould, a spokesman for BGE parent Constellation Energy Group, said the company would comply with the PSC's order.

Harold Williams, a former BGE executive and the lone Democratic appointee on the PSC, dissented from the board's decision and said the commission has "failed consumers."

"They had an opportunity to freeze the rates for a period of time until they had a hearing that possibly could have brought out more information that could have made it possible for them to make decisions that would have been positive for the people of Maryland, and they didn't take advantage of that," he said.

Assuming that the PSC's decision stands, customers will see an average 21 percent increase in their electric bills beginning July 1 and will be charged 5 percent interest on the difference between that amount and the 72 percent increase.

That compares with a roughly 19 percent increase in the governor's plan, which did not charge interest and required Constellation to pass on to customers some of the savings it expects to gain from its proposed merger with a Florida utility owner. In that plan, customers had to opt in, or notify the utility if they wanted to participate.

Implementing the PSC's March 6 order was one of two options that city Circuit Judge Albert J. Matricciani Jr. gave the PSC in a decision this week that was seen as a stinging rebuke of the commission's actions on electric rates to date.

The second option

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