Prospect of agreement on electric rates dims

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ANNAPOLIS -- State lawmakers are the only obstacle to a deal with Baltimore Gas & Electric Co. (BGE) to cut a 72 percent increase in electricity rates this summer, Gov. Robert L. Ehrlich Jr. said yesterday.

Mr. Ehrlich, a Republican, said winning their support would be "very difficult," especially among lawmakers "who have been trying, in some cases, to take down the company over the last month."

The governor said he was neither optimistic nor pessimistic that he, BGE executives and lawmakers in the Democrat-controlled General Assembly would reach an agreement before the legislature's scheduled close at midnight tomorrow. Mr. Ehrlich plans to extend the session if no agreement is reachedby then.

"To a real extent, the work between the principals is done," said Mr. Ehrlich, referring to himself, House and Senate leaders and power company executives. "We are a long way from a 72 percent [increase] the first year."

Senate President Thomas V. Mike Miller Jr., Prince George's Democrat, was less confident about the progress toward an agreement. He said they were "no closer" to a decision than on Friday, when lawmakers first rejected the deal. The proposal under consideration would increase electricity rates for BGE's 1.1 million customers by about 15 percent in July, followed by sharper increases in 2007 and 2008, when rates would reach market prices.

Lawmakers also are set to override the governor's vetoes of three energy bills, which, if enacted, likely would end rate-reduction talks, spur a BGE lawsuit against the state and accelerate higher energy prices. The bills would block an $11 billion merger of Constellation Energy Group, BGE's parent company, with Florida Light and Power Inc.; freeze BGE prices; and give legislative leaders control of the Maryland Public Service Commission, which regulates utilities.

Neither the Senate nor the House would override the vetoes if agreement is reached on the increasing rates, Mr. Miller said, and he doesn't know which deal will satisfy enough lawmakers to pass.

Mr. Ehrlich said the lawmakers' threat to block the merger and otherwise interfere with the utility's business has prompted Moody's Investors Services to downgrade BGE's bond rating. The company's lower credit score makes borrowing the money needed to reduced electricity rates more expensive.

The governor's relationship with Democratic leaders in the assembly appeared further strained yesterday when he missed a meeting on energy rates.

"The governor was not there," said House Speaker Michael E. Busch, Anne Arundel County Democrat.