Deregulation

Maryland lawmakers are buffeted by powerful business interests and concerns about rising consumer electricity bills as they consider a plan to overhaul the power market. Sound familiar? That was 1999, and they chose to deregulate the industry. A decade later, the same scenario is playing out, but many of those same lawmakers have come to the opposite conclusion - that the state should move back to a regulated market. The about-face in the General Assembly reflects deep-seated fears about constituents being subjected to ever-increasing utility bills.

Prospects for real household-electricity deregulation are fading in Maryland, and so are chances they can be revived. The one thing that would bring true deregulation - exposing families to new, volatile price swings and making them shop for kilowatts - is the one thing Maryland won't allow. Burned once by soaring rates and angry consumers, politicians are unlikely to place another finger over the flame. Look for Maryland to imitate Illinois and Virginia by re-regulating - renewing price controls on residential electricity and perhaps putting Baltimore Gas and Electric and other utilities back in the power-plant business.

General Assembly leaders say they hope to resolve the final details of a controversial electric deregulation bill this week, setting up the possibility of an end-of-session showdown with Gov. Parris N. Glendening should he veto the legislation.The governor, sensing swift movement on the issue, met with the House speaker, Senate president and a top senator yesterday in an effort to hammer out a deal. He softened his insistence on environmental protections in the bill and offered a compromise on his demand for a larger rate cut for residential consumers.

As Maryland moves closer to deregulating the sale of electricity, the so-called "shopping credit" -- a benchmark price charged consumers -- has emerged as a pivotal issue.Once electricity prices are no longer regulated July 1, the shopping credit will be crucial in determining whether Baltimore Gas and Electric Co., the state's largest utility, will face real competition.Under deregulation, BGE's bills to customers will list separate charges for functions such as energy generation, transmission and meter reading.

CREATING a competitive environment for electricity would be good for Maryland residents.That's the bottom line legislators must keep in mind as they fashion a deregulation bill for this state's electric power industry.Monopoly situations usually lead to higher consumer costs; competition tends to drive prices lower. That's what happened when the federal government deregulated the airline and long-distance telephone industries.The same thing is likely to occur with electric power. As The Sun's Timothy B. Wheeler noted, deregulation in Pennsylvania has meant 13 energy companies vying for the business of customers in the Philadelphia area who once had no choice.

The leaders of Maryland's House and Senate urged key legislators yesterday to move ahead quickly with deregulation of electric power or risk losing businesses and jobs to neighboring states that are already doing so.Sensing that many legislators are not convinced of the need to tackle the complex issue now, Senate President Thomas V. Mike Miller and House Speaker Casper R. Taylor Jr. argued that Maryland must catch up with Virginia, Delaware, Pennsylvania and...

STATE lawmakers deserve credit for passing a farsighted deregulation bill that will allow Marylanders -- businesses and homeowners -- to choose their own electric-power provider. The competitive nature of a free-market economy tends to drive prices down. There's every reason to believe it will happen with electric prices, too.Gov. Parris N. Glendening opposed this bill, threatening a veto if he didn't get environmental and consumer concessions. He wisely reversed course Friday. This measure, which is both thoughtful and cautious, puts Maryland in line with nearby states that are deregulating electric power.

General Assembly leaders put the finishing touches yesterday on a bill that would let Marylanders choose their power company, putting pressure on Gov. Parris N. Glendening to sign the pro-business measure or jeopardize his top legislative priorities.A joint conference committee hammered out the last major differences between two similar electricity deregulation bills approved by the House of Delegates and Senate.The final measure includes a rate reduction of 3 percent to 7.5 percent for residential customers who stay with their utilities, and it would create a $34 million fund to help the poor pay their bills.

CONSOLIDATION, not competition, has been the primary result of deregulating the cable TV business in 1996.From a patchwork of small providers without competing local franchises, the industry quickly evolved into nationwide concentrations of corporate giants aiming to become full-service communications providers of phone, Internet and TV. The largest, AT&T, is poised to control cable connections to 25 million homes.Rates, no longer regulated by any level of government, are rising ahead of the cost of living.

The Office of the People's Counsel yesterday rebutted claims by a coalition of power companies that said this week's deregulation settlement with BGE closes Maryland to competition.Michael J. Travieso, the state-appointed People's Counsel representing consumers, said criticism of the state's energy-deregulation plan by the Mid-Atlantic Power Supply Association is "inaccurate and misleading."On Tuesday, Baltimore Gas and Electric Co. and at least a dozen parties involved in closed-door talks submitted a proposal to the Public Service Commission (PSC)

Maryland is doing it again: rushing into politically fashionable energy legislation that could end up generating a nasty shock. Policymakers are talking about canceling kilowatt shopping even for commercial and industrial customers. They're setting up everybody to pay for expensive, new generation plants. What, exactly, is the hurry, except to appear to be doing "something" about high electricity prices? Re-regulation would force utilities to build the new power plants that deregulation was supposed to bring but didn't.

Maryland lawmakers are buffeted by powerful business interests and concerns about rising consumer electricity bills as they consider a plan to overhaul the power market. Sound familiar? That was 1999, and they chose to deregulate the industry. A decade later, the same scenario is playing out, but many of those same lawmakers have come to the opposite conclusion - that the state should move back to a regulated market. The about-face in the General Assembly reflects deep-seated fears about constituents being subjected to ever-increasing utility bills.

There's no question that Warren E. Buffett's proposed purchase of Constellation Energy Group for $4.7 billion - together with the additional $1 billion investment by Mr. Buffett - is good for the management of Constellation. It's good for Mr. Buffett, too. However, it's not a good deal for Maryland. According to Constellation's second-quarter SEC filing, its local distribution company, Baltimore Gas and Electric, was worth about 20 percent of the whole company. Therefore, the rest of the company can be bought for less than $4 billion.

About 1.1 million Baltimore Gas and Electric Co. customers will receive $170 credits on their September electricity bills during the coming days as part of a state settlement with Maryland's largest utility. The credits, part of a $2 billion settlement that state lawmakers approved to resolve a dispute with BGE parent Constellation Energy Group Inc., were applied Aug. 29 to utility accounts. The company's September bills reflect the credit, which will be subtracted from a customer's electricity charges.

The state's largest utility told regulators yesterday that competition is Maryland's best hope to deal with rising energy rates, while consumer advocates countered that electric deregulation is a failure and needs to be reformed. The two sides presented their divergent views at a Public Service Commission hearing to consider options for re-regulating the state's power industry - part of a continuing review of the 1999 legislation opening the market to competition. Lawyers representing industry and consumers each declared the other's proposals would result in higher electric rates, which in the case of Baltimore Gas and Electric Co. have climbed 85 percent since deregulation became law in 1999.

The General Assembly's approval of the $2 billion settlement with Constellation Energy Group may have closed the books on stranded costs and other disputed elements of the state's nine-year-old deregulation effort, but it is hardly the last word on electricity. In the months ahead, it's clear some important questions must still be answered, including the most fundamental: Should Maryland reregulate energy supplies? First, however, there's the matter of making sure the state's electricity customers aren't facing brown-outs or other shortages in as little as three years - as some have warned.

Lawyers for the state and Constellation Energy Group Inc. have been meeting to seek a resolution of their differences over electricity deregulation, talks that Gov. Martin O'Malley characterized yesterday as "fairly active." Telephone conversations between the governor and Constellation Chief Executive Officer Mayo A. Shattuck III paved the way for the negotiations, which began about a week ago. "We're in discussions regarding the pending litigation," acknowledged Constellation spokesman Rob Gould.

Maryland's top energy regulator asked lawmakers yesterday to limit certain costs that are passed on to BGE's customers, potentially saving them more than $1.4 billion in coming decades. Steven B. Larsen, chairman of the Public Service Commission, also asked lawmakers to expand the agency's subpoena power over Baltimore Gas and Electric Co.'s parent company, Constellation Energy Group. He made the pitch before House and Senate committees that are considering legislation to revisit a 1999 deregulation agreement with Constellation that many lawmakers now contend was a raw deal for consumers.

State utility regulators ordered lawyers for Constellation Energy Group yesterday to appear at a hearing Tuesday to discuss disputed terms of a 1999 deal to open Maryland's power market to competition. The order comes after Constellation frustrated the Maryland Public Service Commission by not appearing at a similar hearing Feb. 6. That hearing was called after Constellation and its utility subsidiary, Baltimore Gas and Electric, criticized the commission for what executives claimed was a faulty analysis of the deregulation deal.

You might think the move to deregulate Maryland electricity markets was done in ignorance, accepted enthusiastically and exposed as a disaster only years later. "This was uncharted territory for the legislature," Del. Dereck E. Davis, who supported deregulation, told The Sun last month. "We took the information presented before us and made the best decision we could, as did the Public Service Commission at that particular time." In fact, numerous smart and courageous people charted the territory quite clearly.