Rate Increase

BY RAISING interest rates for the second time in eight weeks, the Federal Reserve has made a clear statement that preventing any emergence of inflation is a paramount policy goal. Maintaining the nine-year economic expansion, while important, is a secondary consideration.Even though the government's own figures show benign levels of inflation, Fed Chairman Alan Greenspan and his colleagues seem preoccupied with rising prices.Some economists, however, believe we have entered a new era of noninflationary growth.

Starting next month, the average homeowner in Maryland will see monthly electricity bills jump $3.69, to $60.22, following approval yesterday of a 6.5 percent rate increase requested by the Baltimore Gas and Electric Co.Business users, such as office buildings, will have a smaller rate increase, the state's Public Service Commission ruled.On average, all electricity rates in the state will rise 3.8 percent, adding a total of $86.5 million a year to the coffers of Maryland's largest utility.

State hospital rate-setters approved an increase for hospitals yesterday, effective in July, of 0.5 percent above expected inflation -- a rate insurers said was too generous and the hospitals said was "unacceptable" and would cause hospitals to reduce staff and cut programs. The Health Services Cost Review Commission also approved a temporary 1.1 percent rate increase for Johns Hopkins Hospital, retroactive to last month. The hospital had been asking for 3.5 percent, and will get to come back in a month or two in an attempt to justify the higher figure.

With utility bills on the rise, Baltimore City officials approved a series of proposals yesterday to help low-income residents pay for water service -- and at the same time proposed a small increase in the cost of that service. Senior citizens in Baltimore whose household income is $25,000 or less would get a 30 percent break on water and sewer bills. Also, grants to help pay those bills would be made available before water is shut off. In proposing the more lenient system, city officials acknowledged the increased price of gas and electricity and said they hoped the effort to assist with water bills would reduce the number of homes sold at tax sale against a homeowner's will.

Reacting to skyrocketing gas prices, the state Public Service Commission has approved a temporary rate increase for Baltimore city and county cab drivers effective Monday. The increase, 35 cents per fare in the city and 30 cents per fare in the county, will remain in effect for 90 days, said Dwight Kines, general manager of Yellow Cab and Checker Cab, who applauded the action. The five-member PSC board unanimously approved the increase last week. It is 5 cents higher in the city because, on average, Baltimore drivers pick up four fewer fares per day, Kines said.

Don't even tell Evelyn Harlee about the latest electricity plan. Don't tell her that it'll save her money. No, the 45-year-old East Baltimore resident says, she won't be fooled into believing that the phase-in of rate increases will save her any money. "I'm not falling for it because I can add," Harlee says, soaking her nails at a salon on Monument Street in East Baltimore. "And I know about interest rates spread over a long period of time. They tried to pull the wool over our eyes with this plan, but they ain't fooling me."

Everything is getting more expensive these days, even a drink of water.In Baltimore, top city officials yesterday approved raising water and sewer fees by 19 percent, or about $60 a year for an average household."

Upper Chesapeake Health, which operates both hospitals in Harford County, announced yesterday that it would reduce its work force by 158 positions. The action comes a day after one of the hospitals, Upper Chesapeake Medical Center, received a 5.7 percent rate increase from state regulators - about half of the 11.5 percent the hospital had been seeking. "There's a gap between 11 1/2 and [5.7], and one of the things we needed to do was get our expense structure in shape," said Lyle Sheldon, president and chief executive officer of the health system.

Frantic negotiations aimed at averting a 72 percent rate increase for BGE customers broke down at midnight when the General Assembly's 2006 session adjourned amid acrimony. A special session is now expected this month. "The Senate is more important than any one bill. We'll come back when we have more time to look at this issue," said Senate President Thomas V. Mike Miller. "We'll come back with a better product." But not all lawmakers were pleased at the prospect of a special session, which Gov. Robert L. Ehrlich Jr. said he could call as early as tomorrow.