A lot on new PSC's plate

February 17, 2007|By Tricia Bishop | Tricia Bishop,Sun reporter

The state's new Public Service Commission, under intense scrutiny from both politicians and the public, is expected to tackle multiple issues raised by last year's soaring electricity prices along with a host of other utility matters.

Volatile energy prices and a national trend toward electricity deregulation have led to higher prices and consumer dissatisfaction, putting pressure on commissioners in Maryland and beyond to control costs.

Last year, politicians - including then-Mayor Martin O'Malley - called for reforming the PSC and lawsuits were filed by and against its members. In addition, new requirements to study restructuring Maryland's utility system were posed by the state legislature and rate-deferral plan requests were made by Baltimore Gas and Electric Co., which implemented the first phase of a 72 percent increase in electricity rates.

"When there's any kind of a significant price increase like Maryland had, it's going to draw a lot of attention to the commission's decisions, so they usually have to answer complaints from consumers as well as the legislature and the governor about justifying their decision," said Kenneth Rose, a commission consultant based in Ohio.

The commission, like others around the country, is also facing:

Growing demand for utilities to expand their infrastructures to address increased power needs.

Cellular telephone consumers, who are increasingly unhappy with issues such as fees associated with switching carriers.

Pressures to control climate change that could lead to congressional limits on the amount of carbon dioxide utilities emit.

"There's a lot out there on the horizon that commissions are having to grapple with," said Charles Gray, executive director of the National Association of Regulatory Utility Commissioners, based in Washington.

The PSC was established by the General Assembly nearly a century ago as an independent agency. It's charged with regulating public utilities - gas, electric, telephone, for-profit water and sewage companies - and certain transportation businesses, including city taxis.

Its five commissioners are appointed by the governor and approved by the state Senate.

Three current commissioners will be joined by two people appointed by the governor yesterday.

Susanne Brogan served on the PSC from 1992 to 2001 and was among the members who approved deregulation. Steven B. Larsen is the former Maryland insurance commissioner who gained a reputation as a friend of consumers when he blocked an attempt to convert CareFirst BlueCross BlueShield to a for-profit entity in 2003.

O'Malley, the Democratic governor who took office last month, reappointed commission member Harold D. Williams yesterday.

Larsen will become the body's chairman, replacing Kenneth D. Schisler, who was paid about $117,000 per year.

Schisler drew fire for BGE's rate increases, and the legislature tried to force him and other commissioners from their posts. Schisler successfully challenged the attempt, though he resigned from his position last month. O'Malley criticized Schisler during last year's campaign.

Brogan takes the seat formerly occupied by Karen Smith, who resigned this summer. Smith's salary was just shy of $100,000.

"Unfortunately, as a commissioner, particularly in this environment, you have to come up to speed quickly. There's just no alternative. But it can be done," said H. Russell Frisby Jr., a Washington attorney who chaired the Maryland PSC from 1995 to 1998.

In an interview yesterday, Larsen, who has no experience in utility regulation, said he will face a steep learning curve on the job.

Speaking at a news conference yesterday, Brogan said she'll focus on balancing the needs of consumers with the interests of utilities, noting that it's "not always an easy thing to do."

The commission had been criticized by some for putting the needs of business, particularly BGE, ahead of the needs of Maryland residents.

"In a deregulated world, that's when you need regulators who have more vision, and I think the governor has accomplished that" with these appointments, said Catherine I. Riley, a former Harford County state senator who served on the PSC from 1999 to 2003, when Republican Schisler replaced her as chairperson. Riley, a Democrat, has criticized the deregulation plan adopted after she left the commission.

State lawmakers last year placed two major issues before the Maryland commission that must be addressed. One asks the PSC to find a better way to structure the industry in hopes of minimizing rate increases. The other charge to regulators is to study improvements to the state's electricity bidding system.

Under deregulation, BGE and other investor-owned utilities gave up ownership of their power plants and now must buy electricity from wholesale suppliers through a bidding process that some say is flawed.

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