Ratepayers

LAUREL -- Prince George's and Montgomery County officials will meet today to decide whether to take the first step toward selling the nation's seventh-largest water and sewer company. But already, the proposal is in trouble.The Montgomery County Council has decided that a yearlong, $400,000 study of the Washington Suburban Sanitary Commission has failed to prove ratepayers would benefit if the utility's assets were sold."We're not saying privatization is bad, that it will not happen [ever]

A hearing on Baltimore Gas and Electric Co.'s appliance subsidiary raised questions yesterday about whether the utility's subsidy of the nonregulated operation is greater than the $555,000 reported in a recent study.The amount of support provided to the appliance business is a key question in the Maryland Public Service Commission investigation into the financial relationship between the regulated utility -- which is supported by ratepayers -- and its unregulated appliance and service businesses.

Did the Public Service Commission give the C&P Telephone Co. an extraordinarily favorable write-off of a huge pension obligation in order to help C&P pay for a fiber-optic network linking together every high school and college in Maryland?That's the impression left by the confluence of these two events. C&P's ratepayers, it appears, will indeed be footing a hefty portion of the bill for this statewide fiber-optic telecommunications system.That's not the way C&P is promoting this project, though.

A Public Service Commission hearing examiner said yesterday that he would decide by the end of the year whether Baltimore Gas and Electric Co. should be allowed to expand its nonutility business during the next seven months.The hearing examiner, Joel M. Bright, made his decision during a conference to investigate whether BG&E has improperly subsidized some of its nonutility businesses with ratepayers money.Two business coalitions and the Maryland People's Counsel, the official that represents ratepayers, had asked that BG&E be kept from expanding its nonutility operation because of alleged misallocation of ratepayer's money.

With its merchandise operation under fire for being subsidized by ratepayers, Baltimore Gas and Electric Co. yesterday announced that it will establish a separate subsidiary for its merchandise and service businesses."

Maryland telephone customers will foot some of the bill for a new statewide telecommunications network that the president of the Chesapeake and Potomac Telephone Co. had promised would have "absolutely no impact on basic ratepayers."C&P officials acknowledged last week that a favorable ruling by Maryland utility regulators in late March will allow the company to finance installation of a fiber-optic network, at least in part, with money that otherwise would have been refunded to telephone customers from excess profits.

The Baltimore Gas and Electric Co. has won the first round in a Public Service Commission case over whether it is improperly subsidizing some of its nonutility businesses with ratepayers' money.In a decision released yesterday on prehearing motions, a PSC hearing examiner, Joel M. Bright, refused to bar BG&E from expanding its merchandise and service business during the course of the hearing. The hearing itself will begin in January and is expected to last several months.Mr. Bright said the PSC's authority on nonregulated businesses is limited to the effects they might have on the regulated utility business.

More than half a million dollars of ratepayers' money was used to subsidize Baltimore Gas and Electric Co.'s nonregulated appliance and electronics business last year, according to an independent study released yesterday.The report, conducted by the national accounting firm of Ernst & Young, confirmed repeated charges levied by competitors that BG&E's regulated utility business was helping support its merchandise business. Paid for by BG&E, the study was ordered by the Public Service Commission (PSC)

Sharpening the controversy over whether the Baltimore Gas and Electric Co. is subsidizing its merchandise stores with ratepayers' money, the Maryland People's Counsel and two business coalitions asked the Public Service Commission yesterday to restrict BG&E's non-utility operations and take steps to return the alleged subsidy to ratepayers."

Customers of public utilities in Delaware, Virginia and 20 other states may be able to cut their monthly bills a little by asking courts to declare a portion of their rates unconstitutional in the wake of Supreme Court action yesterday.A brief order by the nation's highest court implied that ratepayers in some states -- excluding Maryland -- could file suits charging that utility stockholders, not customers, should pay for a utility's donations to charities.Maryland's Public Service Commission ruled in 1962 that utility companies could not pass through their charitable donations to ratepayers, said PSC spokesman Frank Fulton.

This week the Maryland Public Service Commission began a public hearing into Constellation Energy's proposed $4.5 billion sale of half its nuclear assets to a huge French company, EDF. As currently proposed, the deal appears to be a good one for Constellation's CEO and his shareholders but presents enormous risks and no real benefits for more than 1.1 million ratepayers who depend on BGE to provide a vital service at reasonable rates. The PSC and the state have taken an active role in this proceeding not only because it is the right thing to do, but also because we have a legal obligation to do so. If not, we would abdicate our responsibility to protect the interests of BGE customers from Constellation - the same company that brought BGE to the verge of bankruptcy almost one year ago due to speculative trading practices and a massive $1.8 billion accounting error, while simultaneously bestowing an $87 million golden parachute on its CEO, according to a 2009 SEC filing.

Constellation Energy Group told Gov. Martin O'Malley Friday that it would give ratepayers a break and cancel a lucrative golden parachute package for its chief executive as part of a settlement that could help to ensure regulatory approval of a deal with a French utility. But O'Malley said Constellation's counteroffer to his June proposal does not go far enough. It is the latest development in talks that began behind the scenes but escalated into a public tussle. O'Malley has sought to wage a public campaign, laying out his case in an editorial and a Webcast to try to wring concessions from Constellation.

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.

Energy settlement protects consumers You have to read 18 paragraphs of Jay Hancock's column "BGE settlement settles little" (March 28) before the columnist concedes that the settlement is significant -- which it most certainly is. And while Mr. Hancock focuses on questions about the energy deal, he misses one of the most important aspects of the settlement: the fact that, for the first time in years, the Public Service Commission fought to protect the...

In the final week of a legislative session, bills have a way of dying and then reviving. So it wasn't too shocking that the Senate yesterday reanimated Gov. Martin O'Malley's proposal to promote energy conservation one day after killing the measure. The real surprise was the continued false portrayal of the bill as a choice between giving money to ratepayers or handing it over to faceless bureaucrats. Looking out for ratepayers' interests should be regarded as more than taking a politically expedient opportunity to lower everyone's monthly bills by little more than a dollar.

It would be foolish to give an instant thumbs up or down on the proposed settlement announced last week between the state and Constellation Energy Group over the 1999 deregulation deal. Cursory analysis is what got ratepayers in trouble nine years ago. The proposal has far-reaching ramifications, and lawmakers will need to closely scrutinize all of it in the days ahead. But it's hard not to applaud several key elements of the arrangement that have obvious benefits to consumers - not the least of which is the one-time $170 credit that would be doled out to Baltimore Gas and Electric Co.'s 1.1 million customers at a cost of $187 million to the company.

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.

The snarling between Constellation Energy Group and the state intensified yesterday as the company sued Maryland to recover $386 million it was forced to credit electric ratepayers, while legislators polished a bill that could compel more givebacks. It was the latest in the lengthy back-and-forth between Constellation and state officials over whether ratepayers got the short end of the 1999 deal that deregulated Maryland's electricity industry. The move was meant to lower prices, boost energy production and open the door for competitors, but it has resulted in ill will and severe price spikes after brokered rate caps expired.

Part of the settlement that was designed to open the state's electricity market to competition and lower prices could turn into a "billion-dollar windfall" for BGE's parent company - one paid for by the utility's customers, the Public Service Commission said during a hearing yesterday. But representatives for Constellation Energy Group Inc. said that scenario was unlikely to come from payments for the nuclear power plant portion of the 1999 settlement, which was agreed to by the company and state leaders.