Ehrlich blasts Democrats' utility rate bill

June 14, 2006|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

Gov. Robert L. Ehrlich Jr. blasted the Democratic-dominated legislature's BGE rate deferral plan yesterday, warning that it would destabilize Maryland's regulatory environment, lead Wall Street to downgrade the utility's credit rating while boosting its borrowing costs, and potentially produce rolling blackouts.

"There are a whole lot of bad provisions in this bill," he said. "It ... sends an incredibly destabilizing message to the markets, making capital more expensive, and to the extent capital is more expensive, BGE has tremendous problems."

Those are arguments BGE and its parent, Constellation Energy Group, have made at one time or another in the past several months, but ones the utility largely dropped yesterday as it focused on a few key provisions in the bill and settled in for behind-the-scenes negotiations with the legislature.

While Constellation has adopted a cautiously optimistic tone, Ehrlich, who once proclaimed himself a "neutral arbiter" in the rates crisis, has adopted much of the company's former rhetoric. He hasn't said whether he would veto the bill, but he's unveiled a list of objections in television, radio and print interviews and in automated telephone messages being paid for by the state Republican Party.

Members of both political parties say BGE rates could be the defining issue of this election. Democrats - including his prospective opponents in the governor's race, Baltimore Mayor Martin O'Malley and Montgomery County Executive Douglas M. Duncan - have tried to paint Ehrlich as a friend to corporations, not consumers.

The governor fought back yesterday, saying that his opponents' pandering has led to a deferral plan that would hurt consumers in the long run.

"The leadership and Messrs. Duncan and O'Malley, they own this now," Ehrlich said. "They'll go out there and do their thing, but they own it."

O'Malley and Duncan have portrayed themselves as champions of the people against the corporations and the Public Service Commission, which is dominated by Ehrlich appointees. The panel members would be fired under the Assembly's plan.

O'Malley and Duncan went to Annapolis yesterday to testify before a joint legislative committee that was holding hearings on the new rate deferral plan, and both said the PSC has to go.

O'Malley highlighted the successful lawsuit he brought against the PSC, which forced new hearings on the rate deferral plan Ehrlich negotiated with Constellation. A judge ruled that the PSC must consider broad factors to determine whether the 72 percent average increase in electric bills is justified.

"The PSC acted unlawfully," O'Malley said. "I urge you to pass this bill ... and replace the PSC."

Duncan said the PSC needs to be replaced with "real regulators."

"The Public Service Commission ... has not lived up to its charge to protect the public's interest and ensure they receive a fair deal," Duncan said.

Ehrlich, who campaigned as a pro-business candidate, has responded to criticism of his PSC appointees by saying, "Of course I was going to bring in more business-oriented commissioners."

The governor has close ties with the energy industry. According to his appointment calendar, Ehrlich and his son, Drew, spent last Labor Day crabbing at the home of utility lobbyist Carville Collins, a longtime friend. Ten days later, the governor played in the Constellation Energy Classic's pro-am in a foursome with Constellation CEO Mayo A. Shattuck III, former Orioles star Cal Ripken and pro golfer Bruce Fleisher.

Two days later, Ehrlich and the first lady sat at the Constellation Energy table at the Baltimore Symphony Orchestra's annual gala. Also seated there were Shattuck and his wife, BGE President Kenneth W. DeFontes Jr. and his wife, and Constellation Chief Financial Officer E. Follin Smith and her husband.

Many members of the Republican Party, a minority in the Assembly, say that Ehrlich has taken the only rational approach on electric rates.

Del. Warren E. Miller, a Howard County Republican, said the governor's concerns about the legislature's approach are well-founded. BGE has to be allowed to recover the costs of electricity, and firing the PSC will only destabilize the state's regulatory climate, he said.

"The legislature can pass whatever law it wants to pass to make people feel good, but I think BGE and Constellation have recourse in federal court, and there's plenty of precedent in case law," Miller said. "The governor was right."

But there are dissenters.

Del. Patrick L. McDonough, a Baltimore County Republican and an outspoken critic of BGE and Constellation, said he doesn't mean to single out Ehrlich for blame, but neither the governor nor the legislative leadership has done much to help consumers.

By taking the PSC to court, McDonough said, O'Malley has done a service for ratepayers because it slowed the process and brought more data to light. Without that action, McDonough said, the Assembly probably wouldn't be back in session.

"I hope we have a hundred lawsuits," McDonough said. "The more flashlights we shine on the cockroaches, the better."

andy.green@baltsun.com

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