PSC hiring consultants to study rate options

BUSINESS DIGEST

June 21, 2007|By Paul Adams | Paul Adams,Sun reporter

State utility regulators said yesterday that they are looking to hire several industry consultants to help them study options for reducing electricity rates in Maryland.

The cluster of studies was required in legislation passed earlier this year in response to concerns about rising electric rates hitting customers of Baltimore Gas and Electric Co. and other investor-owned utilities.

Lawmakers want the reconstituted Public Service Commission to delve into the causes of recent rate increases, which critics blame on the move in 1999 to deregulate the electric industry.

The PSC is seeking bids from experts willing to tackle a range of issues, including whether it would be possible - and cost-effective - to undo deregulation. Industry experts say such a scenario would likely involve considerable costs and legal hurdles, which is why the commission is seeking expert analysis.

The commission also wants experts to examine the profits BGE's corporate parent, Constellation Energy Group Inc., is making on energy sold from its Maryland power plants. Constellation took title to BGE's former power plants as part of the move to deregulate the industry.

Now BGE buys its power supply through a wholesale bidding process in which Constellation is a dominant player. Critics have raised questions about whether Constellation is profiting excessively from the plants - a charge fueled by recent financial disclosures showing the company's profits have soared along with BGE's rates.

Constellation has repeatedly denied the allegations, saying its Maryland power plants have lost money in recent years and are just now returning to a "normal" rate of return.

The PSC also plans to study options for new generation of electricity in Maryland in hopes of reducing the state's dependence on out-of-state power suppliers. Maryland imports about 30 percent of its power - a number that is expected to grow as demand increases.

Lawmakers have given the PSC a $3 million budget to hire experts and conduct the studies, which will culminate in a series of reports to lawmakers starting this fall.

paul.adams@baltsun.com

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