Consumers resent interest charge

June 15, 2006|By TRICIA BISHOP | TRICIA BISHOP,SUN REPORTER

Consumer anger that forced alternatives to the proposed 72 percent increase in electricity bills was rivaled by perhaps only one other sentiment: not wanting to shell out extra money in the form of interest payments to Baltimore Gas and Electric.

"If I have to pay a lot of money anyway, I sure as heck don't want to have any strings attached [that require] paying extra over the years. That's not good," said Carolyn Hicks, 59, of Joppa in Harford County. "They're giving with one hand, and they're taking with the other. That is so ridiculous."

Even before the special legislative session in Annapolis, more than 10 percent of BGE's 1.2 million residential customers - 120,000 people - had requested to "opt out" of a plan that would have required a fee in exchange for a gradual, rather than immediate, 72 percent increase.

That compared with fewer than 2 percent of suburban Washington and Eastern Shore residents who signed up for opt-out programs offered by PEPCO and Delmarva Power, whose rates increased this month by 35 percent or more. Both companies reopened their opt-out sign-up process yesterday, however, a spokeswoman said, extending the deadline through July 15.

The plan passed by the state General Assembly for BGE area customers calls for a two-year phase-in of the rate increase, with an initial 15 percent rise in rates next month paired with a 10-year customer repayment plan. There is no opt-out provision for deferring the increase until next June.

Under the new rate plan, customers would begin seeing a net $2.19 charge on their monthly bills in January, which would pay the interest on loans BGE would have to take out to cover the costs of selling electricity for less than its cost. But BGE's parent company, Constellation Energy Group, has also agreed to give back certain fees it collects, so people won't end up paying extra to BGE beyond the higher cost of electricity, said Warren G. Deschenaux, the General Assembly's chief fiscal analyst.

"I can understand where people don't like to be forced into things, but in this instance, they're not being compelled to do anything that's against their interests, I don't think - at least not their economic interests," Deschenaux said.

The way he sees it, customers in the BGE service area - whether they get their electricity from BGE or a competitor - will make out on the deal. The average monthly BGE bill is about $86, according to the state Public Service Commission. That was expected to increase by 72 percent, or $62, next month to about $148. But now the average bill would go up by $13 to $15, to about $100.

Assuming no increase in the $2.19 monthly charge, customers would pay a total of $262.80 in fees over 10 years for the deferral. But they would receive an average of $47 credited to their bills for the next 11 months, worth about $517. Constellation would absorb the difference.

An amendment drafted yesterday would allow customers to opt out of the deferral plan as of next June and pay the market rate then or choose some "intermediate level rate" to be determined.

"I think this is a very good compromise," said Del. Joanne S. Parrott, a Harford County Republican who has received only a handful of e-mails from consumers worried about the mandatory nature of the plan.

Sen. Delores G. Kelley, a Baltimore County Democrat, however, said during Tuesday's hearing that she had been "cussed out" the night before by people angry over the lack of choice.

"I had a lot of people who just felt like they were inadvertently and involuntarily being made debtors of BGE," Kelley said in a telephone interview yesterday.

The only way to raise enough money to defer the rate increase as planned is to ensure that most customers participate, legislators said.

Some residents have feared that means they will have to pay the difference should they move out of the area before the full increase is implemented, likely in January 2008.

That's not the case, fiscal analyst Deschenaux said. The plan will apply to residents only, whether they've lived here for years or have just moved into the area.

"The only people - and there will be people - who are disadvantaged are people who aren't in the service area during the 11 months [that credits are applied to customers bills] and move in and have the $2 on their bills," he said.

That's little consolation to customers like Hicks, though.

"When you hit somebody in the pocketbook, that's not a real good place to get hit, especially with not only the BGE increase, but the prices at the pump," Hicks said. "We're getting hit at the plug and the pump."

tricia.bishop@baltsun.com

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