State aims to halt utility merger

ANNAPOLIS — The General Assembly yesterday sent to Gov. Robert L. Ehrlich Jr.’s desk a bill that aims to leverage lower energy rates by halting a multibillion-dollar merger between a Florida utility company and the parent company of Baltimore Gas & Electric Co. (BGE).

Florida Power & Light Co.’s proposed $11 billion merger with Constellation Energy Group this summer does not figure in BGE’s 72 percent rate increase, which is expected to jolt the utility’s 1.1 million customers beginning July 1.

But lawmakers, most of whom are seeking re-election, have threatened to delay the merger to persuade utility executives to lower the increase. The bill would establish a special counsel who would review utility mergers and report to lawmakers, thereby delaying the merger by at least a year.

Mr. Ehrlich, a Republican seeking re-election, has criticized lawmakers’ threats, but has not said whether he will veto the legislation. He also has dismissed legislation that would replace the governor-appointed Public Service Commission (PSC), which has regulated utilities, with a panel appointed mostly by Democratic leaders.

“[These bills] are all about politics. They are about legislative intrusion into the executive branch,” he said yesterday. “I have made it clear that I am not happy with or a fan of these bills, since they do nothing but politicize an already politicized issue and have no impact … on rate stabilization.”

The governor said “you can draw your own conclusions” about his veto intentions.

If he does not veto the measure before the legislature adjourns April 10, it automatically will become law. If he does veto the bill, the Democrat-controlled General Assembly is expected to override his action.

Power company executives have vowed to sue if the state interferes with the merger.

Mr. Ehrlich said the merger gives lawmakers leverage in negotiations for lower rates, but it also gives the power company leverage to create the lower rates.

“The merger is a shield and a sword, depending on your point of view,” he said. “It works both ways.”

BGE’s rate increase has resulted, in part, from deregulation legislation in 1999 that capped energy rates at artificially low levels for six years. The deregulation bill was approved by the legislature and signed into law by Gov. Parris N. Glendening, the Democrat who appointed the PSC panel that crafted the legislation.

The current PSC panel approved BGE’s rate increase, as well as a 39 percent increase by Potomac Electric Power Co. and a 35 percent increase by Delmarva Power.

Yesterday, Mr. Ehrlich and key legislative leaders made little headway in negotiations with utility executives to reduce BGE’s rate increase.

Nonetheless, both sides described the negotiations as productive.

“There was progress today,” said Mr. Ehrlich, adding that state leaders and utility executives will meet again today. “Today, proposals were offered by respective parties. That is also a sign of progress.”

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