PSC's limbo snarls regulatory rulings

July 08, 2006|By PAUL ADAMS | PAUL ADAMS,SUN REPORTER

Regulatory decisions affecting things as diverse as Constellation Energy Group's proposed $10.8 billion merger and taxi fares in Cumberland remain in limbo as the legal drama over the legislature's firing of the state Public Service Commission continues, legal and industry experts said yesterday.

As a result of yesterday's court decision to temporarily block implementation of legislation replacing members of the commission, parties involved in about two dozen cases pending before the PSC remain uncertain who will preside over their hearings and when they will be heard.

Millions of dollars are potentially on the line for myriad businesses that have become ensnared in a months-long political and legal dispute over rising electricity rates in Maryland. Chief among them is Constellation, which was to begin hearings on its proposed merger with a Florida utility owner next week, a schedule that is in question because of yesterday's ruling and other factors.

Constellation declined to comment yesterday, but business leaders and lawyers who go before the commission to argue over rates and settle disputes say the uncertainty will do more damage the longer it drags on.

The PSC's reach into Maryland's economy is deep, extending to electric utilities, phone providers, water utilities, bus lines, taxi services and the pilots who guide ships up and down the Chesapeake Bay, among others.

The delay comes at a critical time for the PSC, which in coming months must grapple with a sweeping review of the laws that deregulated Maryland's electricity industry and led to a 72 percent rate increase for 1.1 million residential customers of Baltimore Gas and Electric Co.

The review was required in the legislation that calls for the firing of the five members of the PSC, provides temporary rate relief for BGE customers and requires an extensive review of Constellation's merger.

The turmoil has left Wall Street skeptical of the merger's prospects and has led some credit ratings agencies to downgrade the debt of BGE and other investor-owned utilities in Maryland.

Both of those things could cause utilities to be reluctant to invest in Maryland for years to come, experts say.

"I think the existing commission has done an heroic effort to try to keep things moving, but we've had this uncertainty over whether they had any legal authority to do anything," said Mike Powell, a Baltimore attorney who represents large electricity users before the commission. "Despite their best efforts, I think things were largely ground to a halt."

Powell's law firm also represents cabdrivers in Cumberland who are trying to win PSC approval for their first rate increase since the mid-1980s, when gasoline cost less than a dollar a gallon.

GML Transportation, which represents about half of the cab permits in the city, has lost money in each of the past two years and has struggled to attract drivers because of the low rates. It costs less to take a cab in Cumberland than a bus, the law firm says.

"Every day, week or month that passes without it being finalized is a real problem," said Todd Chason, an attorney with Gordon, Feinblatt, Rothman, Hoffberger & Hollander LLC who represents the cabdrivers.

PSC staff members and the company have agreed to a settlement, but the deal must be voted on by the PSC commissioners, whose authority is in doubt as a result of the legal wrangling.

A similar situation confronts New Frontiers Telecommunications, a tiny Hagerstown phone company involved in a $2 million dispute with Verizon over billing and other issues. The company's complaint against the telecommunications giant is pending before the PSC.

New Frontiers President Clint Wiley was frustrated by yesterday's court decision, which could further delay a case that he has described as a must-win for his company.

"The legislature sort of had blinders on by dealing with only the BGE issue, and while they maybe solved that issue, they've created headaches for the rest of us with business before the PSC," he said.

A spokeswoman for the PSC said that the commission continues to do business despite the legal dispute. The legislation calls for new commissioners to be on the job by July 15.

Chuck Gray, executive director of the National Association of Regulatory Utility Commissioners, said the current commission has a legal obligation to keep working despite the uncertainty over its future.

The risk for New Frontiers and others awaiting PSC action is that if the current members are swept out of office, lawyers and witnesses will have to to start from scratch with a new panel. Another worry is that a new panel could overrule decisions made by current commissioners in the intervening weeks.

The uncertainty will remain even if the court strikes down the legislative move to replace the commission, Gray said. In theory, the General Assembly could reconvene and pass legislation eliminating the PSC and replacing it with a new regulatory body, something that has been done in Alaska and New Mexico.

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