Ehrlich on the attack

Our view: The Republican hits some of Gov. O'Malley's legitimate weaknesses, but the criticism focuses on bad politics, not bad policy

September 28, 2010

Former Gov. Robert L. Ehrlich Jr. has mounted two significant attacks on Gov. Martin O'Malley in the last week, one focused on the major issue of their 2006 matchup (electricity rates) and one focused on the dominant issue of their rematch (jobs). He makes legitimate points in both cases, but at the same time, both attacks miss some of the bigger picture.

The first attack ad produced by the Ehrlich campaign began airing last week and focuses on Mr. O'Malley's failed promise to roll back the 72 percent BGE rate increase of 2006. Mr. O'Malley used that increase, approved by Mr. Ehrlich's appointees on the Public Service Commission, to bludgeon the former governor in that year's election. The Republican former governor's ad includes a clip from one of Mr. O'Malley's 2006 advertisements saying he was "taking on BG&E to stop the rate hike." That, Mr. Ehrlich's ad says, "never happened." Rates went up almost exactly the same 72 percent that was originally planned and, the ad says, "O'Malley gave the bureaucrat who approved the rate hike a huge raise" of $68,000.

It was foolish and irresponsible of Mr. O'Malley to have ever implied that he could roll back the 72 percent rate increase. He could have promised to explore every possible avenue to do so (which he did), but after BGE had locked in its contracts to provide energy to its customers, there was nothing the governor could do to reverse them.

Pointing out that Mr. O'Malley made a promise he couldn't keep is fair game, but Mr. Ehrlich's decision to raise the issue belies the role his appointees to the Public Service Commission played in the whole rate mess to begin with. In 2006, rate caps instituted as part of Maryland's 1999 decision to deregulate the electric industry were scheduled to expire, and as luck would have it, they were coming off at a time when world energy prices were at a historic high.

Mr. Ehrlich had appointed as head of the PSC former state Del. Kenneth D. Schisler, who promised to bring a more pro-industry attitude to the regulatory agency and who fired several experienced staff members without getting the other commissioners' agreement. The agency developed a plan for BGE to purchase contracts for its energy supply for the coming years all at once, and it didn't change its plans when it became clear that the auction would come at the worst possible time. Could a more experienced, professional PSC have stopped an increase in electric rates? Almost certainly not. But it might well have been able to mitigate the damage.

The bureaucrat who got a raise that Mr. Ehrlich's ad refers to is Steven B. Larsen, the former state insurance commissioner who was tapped by Mr. O'Malley to be PSC chairman. Mr. O'Malley did pay Mr. Larsen $68,000 more than his predecessor, but considering the substantial benefits Mr. Larsen helped get for consumers, that was a pretty good deal. Mr. Larsen secured $187 million in direct energy rebates for BGE customers (that came out to $170 apiece) as part of an agreement by the utility to give up $2 billion in future charges. Given that Mr. Larsen was in the job for a year, taxpayers got a 29,000 percent return on investment for that $68,000 in additional pay.

Mr. O'Malley's PSC has continued to operate well, sometimes in spite of the governor's political antics. The governor put tremendous pressure on the regulators during the hearings over BGE parent company Constellation Energy's merger with EDF Group of France. He engaged in unseemly demagoguery and made egregious demands — including a call for Constellation to cut CEO Mayo A. Shattuck III's pay. The PSC showed its professionalism and independence from the governor by putting together a set of conditions that protected ratepayers and allowed the deal, with its potential benefits for the state, to go through. And ratepayers got another $100 in credits out of the deal. Mr. O'Malley didn't roll back electric rates, but he did follow through on his promise to appoint a competent, professional PSC.

As for Mr. Ehrlich's attack on the jobs front, the former governor has caught the current administration in an embarrassing and silly attempt to put a positive spin on a lackluster jobs report from July. The Department of Labor, Licensing and Regulation initially posted a pessimistic take on the report that Maryland had gained 500 jobs that month (a figure that was later revised by the federal government to a loss of 1,000 positions). Then, after Mr. O'Malley's campaign trumpeted them as a sign of continued progress, the agency took the report down and put up a version that put a rosier gloss on the numbers.

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