A little more perspective on the BGE rate issue

July 09, 2006|By C. FRASER SMITH

Some in this financially polarized nation can withstand a 72 percent utility rate increase all at once. A fair number of Baltimore Gas and Electric customers wanted to go ahead and swallow the whole thing right away without the benefit of a temporary reduction.

Some in that group are annoyed by the absence of choice in the matter. They also don't like what some call interest charges.

But for others - minimum-wage workers, people who live from paycheck to paycheck and the fixed-income elderly - hefting the full load would have been a real stretch. The General Assembly's plan for a 15 percent increase allows those people time to adjust consumption or to find other ways to reduce the costs of heating, cooling and lighting houses.

The plan calls for burden-sharing: to provide the temporary relief for lower-income ratepayers, the more affluent among us have to participate in the 15 percent plan.

Psst. Don't tell anyone, but what we have is a kind of utility rate social program. People who care about the community may welcome the opportunity to demonstrate their concern by quietly going along with the program.

Then there's the monthly charge, expected to average $2.19, that customers will pay - for 10 years - to make the 15 percent plan work. Some people don't like that, either.

Here, for political reasons, we are drawn into a semantic thicket: Gov. Robert L. Ehrlich Jr. joins those who call this an interest charge. The Democratic Assembly leaders say it's a payment against principle. But, again, it's a payment that makes 11 months at 15 percent work.

It's at least possible - though plan opponents hardly ever mention it - that there will be no charge at all. If the merger of Constellation Energy Group and Florida's FPL Group goes through, there may be sufficient savings to wipe out the $2.19 charge.

This may be the most important part of the Assembly's plan.

The new Public Service Commission to be appointed by the governor and the Assembly would hold new hearings that could reduce the 72 percent. But a lawsuit has been filed protesting the Assembly's PSC "restructuring," so the step may be delayed - or not taken at all.

There are those who say the PSC should not have been sacked. Its offenses, according to this view, were procedural, not substantive.

That thinking is wrong, for two reasons at least.

Procedure is substance. If there is an insufficient airing of the arguments, the likelihood of reaching an accurate result is diminished, if not lost entirely.

The PSC was way too close to the industries it should have been regulating. That observation makes the lack of sufficient hearings a more meaningful lapse.

A series of e-mails, many of them published in newspapers, show inappropriate cooperation between the regulators and the industry. In one case, the PSC chairman, Kenneth D. Schisler, suggests to a lobbyist that he, Mr. Schisler, might lean on another lobbyist to win his support for a regulatory waiver that Lobbyist One was looking for. Since Lobbyist Two had clients with other regulatory cases pending before the PSC, there would be significant pressure on Lobbyist Two to agree. Go along, in other words, or lose your other cases.

Lobbyist One urges Mr. Schisler away from this approach, calling it "heavy handed." So here we have an industry lobbyist policing the ethical behavior of a regulator. Stop the world.

Perhaps it is naive to think this sort of quiet leverage and trading doesn't go on. It might even be necessary up a point. Too far, though, and you have what has been called the "culture of corruption."

Finally, here's the substance-laden procedural question: If the PSC did not hold full-fledged hearings - a judge in the Circuit Court of Baltimore said it did not - how could it know whether the 72 percent increase was justified? Hold the hearings, the judge ordered.

The Assembly went one better. It fired the PSC. It got the regulatory train back on the track.

In a lawsuit, Mr. Schisler now argues that legislators overstepped their constitutional boundaries. The Assembly says it had every right to dissolve and reconstitute a body it created.

The Court of Appeals will decide which side is right.

C. Fraser Smith is senior news analyst for WYPR-FM. His column appears Sundays. His e-mail is fsmith@wypr.org.

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