- The Washington Times - Thursday, April 20, 2006

ANNAPOLIS — Gov. Robert L. Ehrlich Jr. yesterday announced that he has sealed a deal with Baltimore Gas and Electric Co. executives to phase in a 72 percent electricity rate increase over 18 months.

The deal will increase BGE’s rates by 19 percent starting July 1 and by 25 percent in June 2007, then allow the rates to rise to market prices in January 2008. A monthly $15 charge for the deferred payment will be added for two years to the bills of the utility’s 1.2 million customers who participate in the plan.

“Our No. 1 priority has been working Marylanders, people who literally could not afford the 72 percent [increase] overnight,” said Mr. Ehrlich, a Republican seeking re-election.

BGE will spend $600 million over 10 years to reduce costs for residential customers. The savings will be passed on to consumers as credits totaling about $450 per customer over 10 years.

The $600 million contribution, however, is contingent upon the consummation of the $11 billion merger of BGE’s parent company, Constellation Energy Group, with Florida utility FPL Group.

By making the deal with BGE officials, Mr. Ehrlich avoided having to call a special session of the Democrat-controlled General Assembly, which ended its regular session last week without reaching an agreement on the electricity-rate issue.

Mr. Ehrlich announced the energy agreement a day after winning approval of a 2-cent cut in the state property-tax rate, to 11.2 cents per $100 of assessed value.

The Ehrlich administration also has made a deal to reduce electricity-rate increases of 39 percent by Potomac Electric Power Co. (Pepco) and 35 percent by Delmarva Power. Those rates will be phased in over a year, with a 15 percent increase in June and a 15.7 percent increase in March.

The administration’s agreements with BGE, Pepco and Delmarva must be approved by the utility-regulating Maryland Public Service Commission.

Speaking from the steps of the State House yesterday, Mr. Ehrlich said the agreement was reached with BGE executives after 10 days of “very difficult, time-consuming” negotiations.

Maryland Democratic Party spokesman David R. Paulson greeted the deal with criticism.

“The Ehrlich BGE plan guarantees rate hikes of the full 72 percent in 18 months, and you get to pay $15 a month for the privilege,” Mr. Paulson said.

Consumers may opt to participate in the phase-in or begin paying the 72 percent increase immediately in July.

The plan is similar to the deal that died in the Senate on April 10 — the last day of the legislative session — except it is slightly more costly for consumers. The legislative plan would have raised rates 15 percent in July and cost customers about $3 a month for the deferred payment.

Mr. Ehrlich said the $1.2 billion financing plan that made the deal work was the best arrangement without legislation for a state-secured, low-interest loan.

The governor said the skyrocketing electricity rates were a problem that he inherited.

“We were dealt a hand, and we have done the best we can do,” Mr. Ehrlich said.

Critics of the opt-in portion of the plan say it will hurt low-income residents.

Mr. Ehrlich said BGE and nonprofit groups have pledged to conduct a massive public education campaign about the program.

“Opt in works,” Mr. Ehrlich said. “The consumers will be properly educated.”

About half of BGE’s 1.2 million residential customers are expected to participate, said Robert L. Gould, communications director for Constellation Energy Group.

The average bill will increase from $92 to about $110 in July. It will increase another $4 in January and another $21, plus the $15 deferment charge, in June 2007. It will rise about $10 more in January 2008 to reach market prices.

Customers who opt out of the phase-in program would pay the full 72 percent increase beginning July 1, which would be about $48 more on the average bill.

Those who opt for the phase-in would pay about $49 more on the average bill by June 2007 and $63 more a month by January 2008.

Rates could increase more if market prices continue to rise during the phase-in period, Mr. Gould said.

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