Rate-limit plan unveiled

Assembly leaders would hold BGE increase to 15%

June 13, 2006|By KELLY BREWINGTON, ANDREW A. GREEN AND JENNIFER SKALKA | KELLY BREWINGTON, ANDREW A. GREEN AND JENNIFER SKALKA,SUN REPORTERS

Maryland General Assembly leaders unveiled a plan yesterday to limit the rise in BGE electricity prices to 15 percent for the next 11 months, while replacing the five-member Public Service Commission with new regulators who would recommend future rate increases after studying the utility company's finances.

Legislative committees will begin today debating the proposal, designed to lessen the impact of a 72 percent rate increase scheduled for July 1, in the middle of a heated election season. The full House and Senate could vote on the bill as soon as tomorrow, during a special session of the Assembly convened to address the increase that has angered many of the utility's 1.2 million customers.

The plan was released after a hectic day of closed-door leadership and party caucus meetings. It was drafted with little or no input from Republican legislators, Gov. Robert L. Ehrlich Jr., BGE or its corporate parent, Constellation Energy Group.

Senate President Thomas V. Mike Miller, a Democrat, said the plan is an improvement over a relief proposal that failed during the closing hours of the 90-day Assembly session earlier this year and is superior to other ideas floated since then - including one negotiated by Ehrlich.

"This bill is better than 72 percent. It's better than what the [Public Service] commission did. It's better than what the governor did," Miller said. "It provides rate relief and at the same time allows the first comprehensive look at the distribution of electric power in Maryland in 50 years."

The legislative plan would automatically enroll all customers, without the choice of opting out. Customers would be charged monthly fees averaging $2.50 for 10 years to compensate BGE for money it would have to borrow to make up for lost revenue.

The proposal also would reconstitute the PSC, which has been under fire for months from Democrats who say that the four of five members appointed by Ehrlich are too closely aligned with the industries they regulate and have not protected consumers from the impacts of a 1999 deregulation law and rising energy prices.

The bill would fire the PSC as of July 1, allowing the governor to pick from a legislature-selected list of 10 candidates to replace the body's five members. If Ehrlich didn't name new members by July 15, the legislature would choose.

The anticipated spike in electricity costs comes with the expiration of six-year rate caps imposed as part of the 1999 plan. It has been the dominant political topic for months.

After lawmakers' plan to blunt the rate increase fell apart during the final minutes of the Assembly in April, Ehrlich negotiated with BGE and Constellation executives and unveiled his own proposal for rate relief.

Since then, a legal and political fight has been brewing among advocates, lawmakers, Ehrlich and his Democratic challengers for governor - Baltimore Mayor Martin O'Malley and Montgomery County Executive Douglas M. Duncan. O'Malley sued to have the governor's plan overturned, earning a court victory.

Lawmakers agreed last week that they wanted to return in a special session, and the governor issued a formal order yesterday calling them back to work.

"The General Assembly should pass an electric rate relief plan that provides bona fide, meaningful assistance to customers without jeopardizing the service and reliability of our electricity supplies," the governor's order said. "Immediate action is necessary to recoup customer benefits lost as a result of the city's lawsuit."

The Ehrlich administration has raised alarms in recent days about the possibility that the legislature's actions - such as firing the PSC - could destabilize Maryland's utility industry and ultimately hurt consumers. But as he saw the first details last night, Ehrlich Chief of Staff James C. "Chip" DiPaula Jr. reserved judgment.

"It raises more questions than it answers," DiPaula said of a summary provided by the legislature's Democratic leaders. "The governor has always been focused on providing relief and solutions, and this plan, while it takes care of one year, creates a lot more difficulty and problems in the out years."

But, he said, "The governor has always been willing to work with legislative leaders on a solution, and as long as you have willing partners, the governor will be happy to engage in this dialogue."

Constellation became aware of the plan last night, even though BGE would have to borrow about $600 million to make the deal work. The legislature would help it secure the debt, which would be repaid through the monthly fee.

"We've not been a party to any negotiations," said Constellation spokesman Robert L. Gould. "We look forward to getting it so we can review it."

Ehrlich emerged from the governor's mansion early in the afternoon to caution lawmakers not to shake up the PSC unnecessarily. He would not say whether he would veto the legislative plan taking shape.

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