Senate revisits rate relief

O'Malley tries to save $2 billion in payments to BGE's customers

General Assembly

April 05, 2008|By Bradley Olson | Bradley Olson,Sun reporter

With $2 billion in electric rate relief at stake, the O'Malley administration mobilized a lobbying blitz on the Maryland Senate in an effort to reverse an amendment passed Thursday night that could kill its settlement with Constellation Energy Group.

The situation has echoes of the final night of the 2006 session, when qualms by senators scuttled a BGE rate-relief deal in the last minutes before the General Assembly adjourned for the year, eventually leading to a special session that summer.

Top lawmakers, aides in the House and Senate, and energy lobbyists shuttled between the two legislative chambers yesterday after crafting a strategy to resurrect the deal.

Together, they spent the day trying to line up enough votes to pass the House version of the settlement ratification bill without the amendment, which 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. That effort succeeded in the House last night, 98-41.

If the Senate approves a clean version of the bill, it will go straight to Gov. Martin O'Malley's desk for his signature.

Attorney General Douglas F. Gansler's office also weighed in, increasing the pressure to quash the amendment with an opinion that the settlement would be "void" if the amendment made it through the General Assembly.

By the end of the day, the efforts seemed to be having an effect.

Sen. Brian E. Frosh, a Montgomery County Democrat and chairman of the Judicial Proceedings Committee, said he thought that a majority of senators would eventually support a compromise bill that didn't include the amendment. He was among the senators who voted for the provision, but he called that action "an expression of intent as opposed to a line drawn in the sand."

"If it's a choice between the settlement and no settlement, I'll take the settlement and the bill," Frosh said.

O'Malley responded to the amendment aggressively yesterday morning, calling the Senate's action unacceptable. He made energy rates a key part of his 2006 campaign for governor and has suffered politically for his inability to roll back a 72 percent rate increase by Baltimore Gas and Electric Co., a subsidiary of Constellation.

"A mistake was made on the Senate side," O'Malley said. "For the sake of making a statement ... we got ahead of ourselves and started having a debate on the pros and cons of regulation."

That debate was valuable but was premature and should be taken up only after sealing the Constellation settlement, he said.

The truce announced a week ago between state officials and Constellation ended a public and legal feud begun in 2006, when BGE announced the 72 percent increase for its 1.1 million ratepayers. The increase followed the end of rate caps implemented as part of the state's 1999 deregulation of Maryland's utility market.

The current Constellation settlement would give ratepayers a one-time rebate of $170 each, for a total of $187 million; secure $346 million in credits that the company had sued to reclaim; and spare ratepayers the obligation of paying up to $1.5 billion more for the eventual dismantling of the aging Calvert Cliffs nuclear power plant in Southern Maryland.

Before both legislative chambers began business yesterday morning, aides to top lawmakers and the governor had settled on a plan to try to move the House version of the bill through the Senate.

The Senate gave final passage to its amended version of the bill yesterday morning, but given the machinations under way, Senate President Thomas V. Mike Miller joked that "you might see that bill come back in some fashion."

He then told senators about former Gov. Marvin Mandel's habit of bringing lawmakers into his office one by one, sometimes smoking a pipe, and lobbying them until they changed their minds on any number of issues.

"I'm not saying that's going to happen here, but ... " Miller said, prompting a great deal of laughter in the chamber.

The Senate could take up the House version of the bill today or Monday, and many lawmakers expected it to be held over for the weekend so that supporters could continue to rally votes.

Sen. Thomas M. Middleton, chairman of the Finance Committee, huddled frequently in the morning with top aides to Miller and with Gerry Evans, a lobbyist for Constellation who is a friend of Miller's.

Along with Public Service Commission Chairman Steven B. Larsen, they sought to persuade several senators that in addition to killing the bill, the amendment could also have severe unintended consequences, including the possibility that a return to regulation could cause rates to rise even more.

Sen. Verna L. Jones, a Baltimore Democrat who voted for the amendment, said she "was up in the air" about whether to vote for the settlement if the House version comes to the Senate.

"I don't want to throw the baby out with the bathwater, but I'm concerned about my constituents and coming up with the solution that's most beneficial for them," she said.

As the day dragged on, nearly every lawmaker who voted for the amendment had been contacted several times by aides, lobbyists and senators fighting to save the settlement.

"I never thought it would be so hard to give $2 billion back to consumers," O'Malley said last night.

Some remained opposed to the deal, including Sen. George W. Della Jr., a Baltimore Democrat, who said, "Everyone recognizes we made a mistake in 1999, and this was one small, positive signal to the public that we care about them."

bradley.olson@baltsun.com

Sun reporters Gadi Dechter and Laura Smitherman contributed to this article.

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