- The Washington Times - Wednesday, April 12, 2006

ANNAPOLIS — Baltimore Gas and Electric Co. residential customers face at least a 21 percent increase in their electricity bills this summer, but Gov. Robert L. Ehrlich Jr. yesterday said he is seeking a better deal.

The Democrat-controlled General Assembly adjourned Monday without sealing a deal that would have further reduced BGE’s 72 percent rate increase and without overriding Mr. Ehrlich’s vetoes of three bills that would have affected the utility’s business.

Consequently, a rate-stabilization plan engineered by the utility-regulating Public Service Commission (PSC) is set to go into effect.

The PSC plan would phase in higher rates over two years, beginning with a 21 percent increase in July and another 36 percent increase this fall. It also would charge consumers 5 percent interest each month on their deferred payments to BGE.

Customers could opt out of the plan and avoid the interest charge by paying the 72 percent increase starting July 1.

Mr. Ehrlich, a Republican seeking re-election, yesterday said he is looking for a way to cut the increase without having to convene a special session of the legislature.

“We are obviously evaluating all options,” he said. “The legislative route was one option. That route now has not been successful.”

BGE officials said the commission’s plan is “workable” and they will confer with the governor and PSC members to “fine-tune” it.

“Just because of [Monday] night’s events doesn’t mean we don’t continue to talk,” said Robert L. Gould, communications director for Constellation Energy Group, BGE’s parent company.

A month of negotiations between state officials and BGE executives resulted in a deal that would have phased-in higher rates over two years. It would have allowed a 15-percent rate increase in July and included $600 million in rate cuts over 10 years paid for by BGE.

The House of Delegates approved the deal by a wide margin, but the plan fell one vote short of approval in the Senate.

“I do not know what people were thinking that voted against this,” House Speaker Michael E. Busch, Anne Arundel County Democrat, said after the session ended Monday. “You had an opportunity to get $600 million to mitigate the increase.”

Mr. Gould said he did not know if BGE could lower the first rate increase to 15 percent without legislation for a state-secured loan. “It becomes more challenging,” he said.

He declined to say whether the utility would spend $600 million to cut its rates.

Mr. Ehrlich is expected to announce today whether he will order a special session.

If he were to call a special session, it likely would occur during the start of the traditional campaign season and would have to produce a deal amenable to lawmakers and BGE before the power company’s higher rates take effect July 1.

What’s more, the outcome of a special session is uncertain.

In December 2004, Mr. Ehrlich ordered a special session to resolve the state’s medical malpractice insurance crisis. Democratic lawmakers largely ignored his calls for tort reform and eventually enacted legislation, over Mr. Ehrlich’s veto, that imposed a 2 percent tax on premiums for health maintenance organizations (HMOs).

On Monday, the legislature let stand three vetoes of energy-related bills. The bills would have:

• Blocked Constellation Energy’s $11 billion merger this summer with Florida utility FPL Group. Lawmakers had sought to use threats of squelching the merger as leverage in their negotiations with BGE officials.

• Required BGE to return $528 million its customers paid as part of a 1999 deregulation deal. The returned funds would have offset the 72 percent rate increase.

• Fired the governor-appointed PSC and replaced it with a panel mostly appointed by Democratic legislative leaders.

Mr. Ehrlich yesterday blamed the death of the rate-reduction deal on Democratic partisan politics.

Senate President Thomas V. Mike Miller Jr. spent months conducting a “McCarthy-type” probe of administration firings of state workers but waited until the last minute to consider a bill that would have eased the “rate shock” to BGE’s 1.1 million residential customers, the governor said.

“By any measure, these misspent priorities are a function of partisanship,” Mr. Ehrlich said. “We need to have an election in Maryland. It’s time for an election.”

Mr. Miller said the governor was the one who should take responsibility for the electricity crisis.

“The ball is in the governor’s court,” the Prince George’s County Democrat said. “I wanted to work with him. … He’s kind of in a tight spot, as we all are, because his Public Service Commission has previously approved a 72 percent rate increase.”

The PSC approved the rate increase earlier this year, and four of the commission’s five members were appointed by Mr. Ehrlich.

The rate increase has resulted, in part, from a 1999 deregulation deal under Gov. Parris N. Glendening, a Democrat, that capped electricity rates below market levels for six years. Worldwide demand for energy also has driven electricity rates higher.

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