Senate vote might nullify BGE pact

Power plant regulation runs afoul of terms

General Assembly

April 04, 2008|By Timothy B. Wheeler and Bradley Olson | Timothy B. Wheeler and Bradley Olson,Sun reporters

The Senate voted yesterday to regulate any new power plants built in Maryland, brushing aside warnings that its action could scuttle a $2 billion settlement of the state's prolonged legal battle with Constellation Energy Group.

While considering a bill to ratify the settlement, senators voted 27-18 in favor of an amendment that would require all new power plants built in Maryland to first offer their electricity for sale in the state and be regulated by the Public Service Commission.

Sen. James C. Rosapepe, a Prince George's County Democrat who co-sponsored the amendment, said the vote would begin to correct the mistake he and many others believed lawmakers made in 1999 to deregulate electricity generation in Maryland.

"You can't put the genie back in the bottle," he said of the dramatic increase in electric bills that residential ratepayers statewide have had to pay since price controls were lifted.

"But when you buy new bottles, you can make sure they've got a cap on them."

Sen. Thomas M. Middleton, chairman of the Finance Committee, warned that the change "puts the agreement in jeopardy." The settlement with Constellation announced last week is contingent on the legislature approving a bill ratifying the terms without any deviation, he said.

Middleton's warning was echoed by Constellation spokesman Robert L. Gould, who said, "We believe that this agreement is in the best interest of BGE customers and are hopeful that it will be passed in accordance with the settlement agreement."

"That said," Gould added, "if this amendment were to stand, it would nullify the agreement."

The truce announced a week ago between state officials and Constellation would give the company's 1.1 million residential ratepayers a one-time rebate of $170 each, worth a total of $187 million.

It also would secure $346 million in credits that the company had sued to reclaim and would spare ratepayers the obligation to pay up to $1.5 billion more over the years for the eventual dismantling of the aging Calvert Cliffs nuclear power plants in Southern Maryland.

The agreement ended a bitter public and legal feud, with both sides agreeing to drop lawsuits against each other.

Middleton appealed to other senators to wait until the Public Service Commission had completed a study ordered by lawmakers last year of the feasibility of re-regulating the state's power industry.

"I think there's a strong sentiment to go back to regulation," said Middleton, a Charles County Democrat. But until the study is finished at the end of the year, he said that officials won't know for sure if re-regulating will help or hurt ratepayers.

Sen. E.J. Pipkin, an Eastern Shore Republican who introduced the amendment, hailed the Senate vote.

"This is three years of working through tedious documents and paperwork to say enough is enough," he said. "Tonight, the Senate went on record saying it wants to take regulatory action for relief on ratepayers."

O'Malley spokesman Rick Abbruzzese said the governor would continue to work with legislators on the bill but said the amendment "does call into question a nearly $2 billion deal for ratepayers."

The Senate vote came at the beginning of an unusual evening meeting called to handle the crush of legislation in the waning days of the annual 90-day General Assembly session, which ends Monday night. Senate President Thomas V. Mike Miller Jr. had called an abrupt recess earlier in the day, in the middle of debate on the amendment, when it became apparent Pipkin's proposal had bipartisan support.

Despite the delay, supporters of the settlement were unable to corral enough votes to fend off the amendment.

"If it sends the parties back to the table, so what?" asked Sen. George W. Della Jr., a Baltimore Democrat who said he's been besieged by constituents demanding that lawmakers do something about high utility bills. "We're not here to put the Good Housekeeping Seal of Approval on everything sent our way."

Middleton said he thought senators were sending a message, knowing in the end that such a proposal would not make it through the House or a conference between the two chambers.

He pointed out that the settlement and the bill did include a provision reaffirming the state's right to move toward re-regulation if it chose to.

PSC Chairman Steven B. Larsen said re-regulating the market is something that should be seriously considered, but added, "We really need to do it at the right time and the right place.

He criticized the amendment as "extraordinarily broad" and said it could put at risk other power plants being planned in the state. It would "worsen, not improve the market in the state," he warned.

There are power generation projects either approved or in the planning stages in Frederick and Charles counties and several proposals by Constellation to take plants out of retirement, according to Malcolm D. Woolf, director of the Maryland Energy Administration.

The Senate vote came after the House had given preliminary approval to the Constellation settlement bill, despite some delegates' questions and complaints about its being rushed through.tim.wheeler@baltsun.com bradley.olson@baltsun.com

Sun reporter Laura Smitherman contributed to this article.

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