Leaders assail boost in rates

City officials offer ideas on easing impact of higher electricity costs

May 25, 2007|By John Fritze | John Fritze,Sun reporter

A day after state regulators approved a 50 percent increase in electricity rates for Baltimore Gas and Electric Co. customers, two Baltimore mayoral candidates and a handful of other city leaders began tossing out ideas for easing the blow.

From repealing the city's three-year-old energy tax to studying the creation of a publicly owned electricity utility, a bevy of proposals began making its way toward the City Council as local officials struggled with an issue that they have almost no control over but that could affect their fate in this year's election.

Of BGE's 1.1 million customers throughout the region, more than 277,000 are in Baltimore, a spokeswoman for the company said.

"I'm outraged," said Del. Jill P. Carter, who is running for mayor in the Sept. 11 Democratic primary election and who has called for a special session of the General Assembly to address the rate increases. "Those that lead our state and lead our city have become silent on this issue."

Most of the ideas proposed by local officials yesterday are warmed over from last summer, when the prospect of a 72 percent electric rate increase captured the public's attention and instantly became a central campaign issue between then-Mayor Martin O'Malley - who won the gubernatorial election, in part, on a promise to address the issue - and then-Gov. Robert L. Ehrlich Jr.

None of the recent proposals, even if they advanced, would stop the immediate rate increase, which is expected to take effect June 1.

At a rally of about a dozen people outside Constellation Energy's downtown headquarters, Carter called on Mayor Sheila Dixon to fund a study requested last year by the City Council to examine the feasibility of creating a publicly owned electric utility. There are more than 2,000 publicly owned electric utilities in the country - including in Los Angeles - though the process of taking over an investor-owned utility such as BGE would be arduous.

Dixon, who supported the study as City Council president last year, responded by saying that the money has been set aside for it. She noted that the city issued a request for proposals last week to identify a consultant.

Keiffer J. Mitchell Jr., a City Council member and mayoral candidate, vowed to reintroduce legislation in the council that would eliminate the city's energy tax, which was expanded to include residential customers in 2004. The local tax, which is based on consumption, costs most homeowners between $20 to $30 a year.

"Many of our residents simply are unable to bear the burden of this rate hike," Mitchell said in a statement. "We must do all that we can to help and keep Baltimore City an affordable place to live."

Mitchell introduced the same bill in April last year, when he was the chairman of the council's taxation and finance committee. O'Malley opposed the repeal, arguing that the energy tax helps reduce the city's reliance on the property tax. The measure was assigned to the council budget committee, where it never received a hearing.

City officials estimate they will collect $30.8 million in energy taxes in the coming fiscal year, up 3.7 percent from the current fiscal year.

Regulation of the electric industry, as well as other utilities, is performed by the state, not the city. The city has virtually no power to affect rates.

But state officials do not face an election this year, and Dixon and other local incumbents could be vulnerable if residents are still angry this fall.

Dixon, who became mayor in January to serve out the remainder of O'Malley's term, will seek a full four-year term in the Democratic primary - which for more than four decades has decided the mayor's race in Baltimore.

Yesterday, Dixon said energy conservation was the key to keeping bills down.

"If you can, cut the lights or cut the TV when you're not in the room," she said. "I'm going to do it."

Maryland's newly appointed five-member Public Service Commission approved BGE's proposed 50 percent electricity rate increase Wednesday after weeks of studying the plan. State regulators gave the company's customers the option of paying the full increase starting June 1 or phasing in the higher costs until January.

The decision, which regulators this week said they reached reluctantly, was the culmination of a regulatory and political process that dragged on for months and that led to O'Malley's gubernatorial campaign pledge to "make government work again."

Outcry over the higher costs dominated last year's General Assembly session, but lawmakers could not agree on a fix. Ehrlich negotiated a rate-deferral plan, which was approved by the PSC, but O'Malley sued to have the approval overturned, and his success spurred the legislature to convene a special session to seek a better plan.

The Assembly passed a law limiting the rate increase to 15 percent for 11 months, deferring the transition to full market rates.

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