Stakes high for action on energy

Legislators to address BGE rates this week

June 11, 2006|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

The General Assembly plans to swoop into Annapolis this week and accomplish in a brief special session what it couldn't in 90 days this spring: protect BGE customers from the 72 percent electricity rate increase coming July 1.

But even if they approve a relief plan heralded by consumers, it is doubtful that lawmakers will end the confusion over electricity rates, the finger-pointing over who is responsible for the increase or the jockeying for political advantage that has dominated the political scene for months.

"For better or for worse, it's going to be a political football in the primary and the general election," said Del. Dereck E. Davis, a Prince George's County Democrat and chairman of the House committee that handles utility issues. "Over the course of the campaign season, everybody is going to try to outdo one another in terms of how best to provide rate relief."

If Democrats get their way and the state Public Service Commission is replaced, customers will have certainty about electricity costs only for a few months until a newly reconstituted regulatory agency can determine what the rates should be.

But with the political, financial and legal stakes running high, there is plenty that could derail the Democrats' plans.

Lawmakers have not included Gov. Robert L. Ehrlich Jr.'s staffers in the drafting of the legislation up for consideration, and it is unclear whether he will veto the product of the session. If he does, that means legislative leaders would have to muster three-fifths of the vote in both chambers to override him.

Constellation Energy, BGE's parent company, hasn't been at the table either. Company officials have threatened to sue over some of the measures lawmakers are considering, and industry watchers expect that enacting them would land the state in court, with the fate of consumers up in the air.

The PSC could revive a lawsuit from an earlier attempt to fire its members, tripping up a key component of the legislature's plan.

As for the finger-pointing and politicking, neither Ehrlich nor his prospective opponents show any signs of abandoning what has been a defining issue in the races for governor and the legislature.

The rate increase comes with the July 1 expiration of rate caps instituted as part of Maryland's 1999 deregulation of the electric industry. The legislation was championed by Democratic Senate President Thomas V. Mike Miller as well as Public Service Commission Chairman Kenneth D. Schisler, who was then a Republican delegate from the Eastern Shore.

Advocates believed at the time that deregulation would spur competition and help consumers, but the benefits haven't developed. Those who continue to support deregulation, including the governor, say the rate caps interfered with the free market, but customers in suburban Washington and the Eastern Shore, where rate caps were lifted two years ago, have seen steady price increases and no significant competition.

"We're the ghost of Christmas future - we've seen where this leads," said Sen. E.J. Pipkin, an Eastern Shore Republican and one of the Assembly's leading critics of electricity deregulation. "It's just a flawed scheme."

Democrats and some Republicans in the legislature see a new PSC as the key to solving the immediate rate crisis. Many critics say the current PSC is too closely aligned with the industries it regulates, and the governor has acknowledged that he has made business-friendly appointments to that agency and others.

The idea is for the legislature to set an initial rate cap of about 15 percent while a new commission hires corporate attorneys, accountants and other experts, holds hearings and determines how large the rate increase should be.

Former PSC Chairwoman Catherine I. Riley said that she thinks the current commission is legitimately to blame for a large part of the rate increase BGE customers face. When the energy market went haywire after Hurricane Katrina last fall, the commission did not delay or modify its plans for BGE to buy its electricity. There would have been a large increase anyway, she said, but it might have been 40 percent or 45 percent instead of 72 percent.

Even so, replacing the PSC members won't instantly solve the problem, she said. Mistakes in the timing and format of BGE's power purchases are irreversible, and investigations into the validity of the 72 percent figure and other matters will take time, particularly as new commissioners get up to speed, Riley said.

"You're asking an awful lot of the commission," she said. "The more direction the legislature can give to the commission, the better."

Ehrlich and Schisler, whom the governor appointed to run the agency, have argued that changing the commission will do no good. The deregulation law took the PSC out of the business of setting electricity rates, they say, and all it can do now is make sure there is no collusion among the companies bidding to supply BGE with power.

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