Larsen named to lead PSC

O'Malley pick of buyer advocate signals shift in panel's approach

February 17, 2007|By Andrew A. Green | Andrew A. Green,Sun reporter

Gov. Martin O'Malley nominated Steven B. Larsen, known as a strong consumer advocate, yesterday to head the Public Service Commission as it prepares to re-evaluate energy deregulation and look for ways to mitigate further utility rate increases.

With the appointment of Larsen, a former state insurance commissioner, and Susanne Brogan, a member of the PSC under Democratic governors William Donald Schaefer and Parris N. Glendening, O'Malley gained effective control of an agency that he sharply criticized during his campaign last fall.

O'Malley regularly accused his opponent, Republican Gov. Robert L. Ehrlich Jr., of stacking the commission too heavily in favor of industry, a politically potent charge at a time when the state's largest energy utility, BGE, was planning a 72 percent rate increase for its 1.1 million residential electric customers.

The two new members will join Harold D. Williams, a holdover Democrat whom O'Malley reappointed yesterday, to give him three of the five seats on the commission. Williams, who was Glendening's last remaining appointee on the board, was the lone dissenting voice during hearings on last year's proposed BGE rate increase.

"We will have a Public Service Commission that is professional, that understands we need to stand up for consumers and understands that a healthy utility, in the long run, is also in the best interests of the consumers," O'Malley said at a news conference announcing the appointments. The governor did not directly answer a question about whether he will seek to replace the other two members of the commission.

Larsen, 47, a former legislative aide to Schaefer and Glendening, has no experience in utility regulation. But he won renown in the General Assembly and the public for his efforts to stop the for-profit conversion of CareFirst BlueCross BlueShield, a deal he concluded would have enriched company executives with large bonuses without helping consumers.

He replaces Kenneth D. Schisler, who became a lightning rod for criticism because he supported the rate increase and maintained close ties with industry lobbyists.

Larsen, currently the president and chief executive officer of Amerigroup Maryland Inc., a health insurer, deferred questions about how he will seek to mitigate rate increases. The commission is required by law to conduct reviews of the deregulation of electricity and of the way utilities buy their power, and Larsen said he does not know whether he will continue the previous commission's work or start over.

Brogan, 49, also has a long history in Annapolis. She, like Larsen, was once a legislative assistant in the General Assembly. After a nine-year stint on the PSC, which included the commission's approval of a plan to implement the 1999 deregulation of the electric industry, she became the director of development for the Radcliffe Creek School in Annapolis.

Little competition

The deregulation plan became a central item of contention in the fight over the BGE rate increase, with many lawmakers and analysts arguing that rate caps the commission instituted were partly responsible for the spike in prices.

The idea behind deregulation was that energy companies would compete to offer service to consumers, but little competition emerged for residential customers.

The BGE price caps were due to expire last June 30, and the PSC's plan called for the company to buy the next year's worth of electricity all at once. Those auctions happened to occur at a time when electric prices were at a peak, causing the expected 72 percent spike.

Thomas A. Firey, the managing editor of the libertarian-leaning Cato Institute's Regulation magazine, said it's curious that O'Malley selected Brogan, one of the architects of that plan.

"The problem with the BGE design was made obvious last winter," Firey wrote in an e-mail. "I've never come across an explanation for the all-at-once requirement."

Other former commission members argue that the PSC's plan to implement deregulation wasn't wholly to blame. Their successors should have altered the plan to match changing market conditions, they say.

Prince George's County State's Attorney Glenn F. Ivey, who was chairman of the PSC for part of Brogan's previous tenure, said her experience during the time of deregulation will be a plus.

"She'll be able to bring options and approaches to addressing the problems that have arisen," Ivey said. "It can really make a huge difference as far as moving forward in this environment."

Brogan said yesterday that the commission could not have foreseen how the markets would develop six years later and that the experience has made her doubt that residential customers will ever benefit from competition in the electric market. "I don't know if going back to re-regulation is the answer," she said.

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