Judge says PSC can use caps

Baltimore, advocates plan to use hearing to state consumers' case

June 10, 2006|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

The Public Service Commission could extend caps on BGE electricity rates to delay a looming 72 percent increase, a judge said in a ruling made public yesterday.

Baltimore City Circuit Judge Albert J. Matricciani Jr. said the PSC overreacted earlier this month when it rejected as unconstitutional his suggestion of extending rate caps.

Matricciani had raised the prospect of keeping limits on rates in a recent decision that sided with Baltimore City in a lawsuit challenging the validity of a rate relief plan negotiated by Gov. Robert L. Ehrlich Jr.

City Solicitor Ralph Tyler said yesterday that he intends to argue before the PSC on Monday in favor of extending the rate caps, which would temporarily prevent the state's largest utility company from imposing the increase on July 1 as planned.

Monday's hearing had been designed to set a schedule for more proceedings in a rate-relief case. But Baltimore City, the Office of the People's Counsel and others plan on using it as a chance to argue for more consumer protections.

"The judge made clear that he expects the PSC at the hearing on Monday to take seriously his order that it does have the authority to extend the rate caps," Tyler said.

Matricciani wrote in a Thursday order: "The court offered the practical suggestion of resolving the complex issues remaining before the commission before imposing a dramatic rate hike on BGE's residential customers," Matricciani wrote. "This course of action, while never [discussed] before the Court, did not seem to it to have the dire constitutional and doctrinal implications ascribed to it by the PSC."

The judge said that he intended that the PSC would allow BGE to collect the difference from customers from July 1 until a new rate stabilization plan goes into effect.

BGE rates have been capped since shortly after the passage of a 1999 deregulation law.

The PSC imposed caps as a transition into a free-market electric industry, with the expectation that competition would develop and rates would fall. Instead, the world energy markets have been roiled by hurricanes, increased demand and Middle East unrest, and prices have soared.

PSC spokeswoman Christine E. Nizer said the judge's explanation shows why the commission didn't want to extend the rate caps. The judge affirmed that BGE is entitled to recoup the cost of electricity plus a reasonable rate of return, so there would be no real benefit to consumers in extending the caps, Nizer said.

"It's kind of a pay now or pay later distinction," she said. "There's been a sense that if you extend the rate caps that somehow [the increase] goes away. The judge's ruling confirmed that's not the case."

In issuing his ruling, the judge dismissed a recent motion from Baltimore asking the judge to review the PSC order. Ehrlich's chief of staff, James C. "Chip" DiPaula Jr., said the judge's dismissal of the city's complaint is confirmation that Mayor Martin O'Malley's legal strategy is merely hindering efforts to find a solution to the rates crisis.

O'Malley is seeking the Democratic nomination to challenge Ehrlich in the November election.

"The governor thinks it's unfortunate that the city has moved to interfere with this process, to add confusion and set the effort back," DiPaula said. "The judge was saying the city's charges were groundless in their recent attempt to interfere."

The question about continuing caps arose out of the city's legal victory in a case against the PSC. The judge ruled on May 30 that the commission had failed in its duty to protect customers and had to hold new hearings on the plan Ehrlich negotiated with BGE's parent company, Constellation Energy Group, to defer part of the pending 72 percent electric rate increase.

In the new hearing, Matricciani ruled, the commission would have to allow cross-examination of witnesses and testimony on a broad scope of issues to determine whether so large an increase in BGE rates is justified.

Matricciani said the commission should either extend rate caps while it holds new hearings or reinstate a mitigation plan it enacted in March. The commission, without holding a hearing, chose the latter, which holds this summer's rate increase to 21 percent but charges customers 5 percent interest on the deferred payments.

People's Counsel Patricia A. Smith said in a statement yesterday that she will call on the PSC to eliminate interest charges from its deferral plan.

She said that she will also ask the commission to change its order so that customers must affirmatively choose to participate, or opt in. Now, all customers are automatically enrolled unless they call BGE to opt out.

"Consumers should not be burdened with any additional charges in order to defer a portion of their bills," Smith said. "Under the current opt out plan, consumers can get stuck in the net and end up paying even more of a rate increase because they must take the initiative by contacting BGE themselves and requesting that they be removed from the payment plan."

Also yesterday, consumer advocates from the Maryland Public Interest Research Group, Common Cause, the Maryland Consumer Rights Coalition and the Association for Community Oriented Reform Now plan to deliver a giant pink slip to the PSC headquarters to demonstrate their desire that the current commissioners be replaced.

Lawmakers are calling for a special session of the General Assembly to begin Wednesday, and replacing the PSC is expected to be a key part of the legislation to be considered.

Volunteers will stand outside the PSC's building in downtown Baltimore and hand out fliers outlining reasons the PSC should be fired and asking people to sign pink slips, said Johanna Neumann, an advocate at MaryPIRG.

andy.green@baltsun.com

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