PSC firing overturned

Top Maryland court says legislature lacked authority

September 15, 2006

Maryland's highest court struck down yesterday the General Assembly's attempt to fire the members of the Public Service Commission, calling it a usurping of the gubernatorial power that is "repugnant to the Maryland Constitution."

The decision is almost certain to set off more litigation because it left in limbo the $10.8 billion merger of BGE's parent company and a Florida utility. The Maryland Court of Appeals blocked the creation of a new Public Service Commission, while leaving intact a provision that prohibits the current regulatory agency from ruling on the merger.

The ruling is a major victory for Gov. Robert L. Ehrlich Jr., who stood behind the PSC amid public outcry over a 72 percent increase in BGE's residential electricity rates and questions about commissioner conflicts of interest.

It bolsters Ehrlich's claim that the Democrat-dominated General Assembly routinely ignores the law in pursuing its agenda, and it is the third consecutive legal victory of Ehrlich's allies over the legislature. Earlier decisions stopped early voting and a law designed to force Wal-Mart to pay more for employee health care.

"I applaud today's decision by the Maryland Court of Appeals to protect the separation of powers in state government," Ehrlich said in a statement. "The court's decision demonstrates that the General Assembly's rush to deflect blame for their 1999 deregulation law was irresponsible and an overreach of the Maryland Constitution."

The decision has no immediate impact on BGE rates, which rose 15 percent July 1 under a limit set by the Assembly in the same law. But rates are set to rise in stages over the next 18 months, and some consumer activists expressed concern that current regulators would not offer the close scrutiny that could help keep prices in check.

The court took weeks to come to its decision, and when it did, it issued 126 pages of opinions, concurrences and dissents, four of them in all, reflecting an unusual lack of consensus about the issue.

"It is neither customary nor helpful for the court to file four opinions in a case. This is, however, a rare and extraordinary case," Judge Alan M. Wilner wrote in a concurring opinion.

The ruling is not a total loss for the General Assembly, however. The appeals court held that the legislature does have the power to remake the PSC and to give itself more authority in appointing its members. However, the court said the way the legislature did so in this law violated the state's separation of powers.

Democrats immediately sought to spin the decision to their own political gain. The party distributed an e-mail saying the ruling means that "the only way to get rid of Ehrlich's `72 percent PSC' is to get rid of Ehrlich."

Senate President Thomas V. Mike Miller issued a statement in which he was unapologetic about pushing the law.

"Our detractors will say the General Assembly overreached," Miller said. "On behalf of consumers and Maryland families? Absolutely."

Ordinarily an obscure state agency that regulates utilities, phone companies and taxicabs, the PSC was thrust into the center of public attention this spring in the weeks after BGE announced that when rate caps instituted as part of Maryland's 1999 electric deregulation plan expired, consumer bills would go up an average of 72 percent.

Advocates, members of the public and legislators - including some Republicans - became increasingly critical of the PSC's handling of the increase. Although the commission no longer sets rates, many argued that it should have conducted a thorough review of whether so large a rate increase was necessary.

The chorus of dissatisfaction grew louder amid reports that Commission Chairman Kenneth D. Schisler collaborated with utility lobbyists on legislation and got utility officials to arrange social outings for him, including a major league baseball game and a hunting trip in Texas.

After failing to pass rate relief legislation in its annual session that ended in April, the General Assembly reconvened in June to temporarily limit the rate increase and to fire the PSC.

Schisler filed a suit in Baltimore Circuit Court shortly after the special session, challenging the firings. He argued that the law violated the constitution's separation of powers by impinging on the governor's authority to name commissioners.

The case had strong political overtones. Schisler is a former Republican delegate from the Eastern Shore and an ally of Ehrlich, who encouraged him to sue. The Sun reported last month that the Maryland Republican Party paid $20,000 for Schisler's lawyers out of funds collected during a fundraiser headlined by President Bush.

Baltimore's Democratic Mayor Martin O'Malley, who is running for governor, has called for replacing PSC members as part of his campaign platform, and the city has filed lawsuits seeking greater regulatory review and, ultimately, lower rates.

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