- The Washington Times - Wednesday, March 8, 2006

Electricity rates for Maryland residents will soar this summer, according to the Maryland Public Service Commission.

The commission, which oversees state utilities, announced yesterday that customers served by Potomac Electric Power Co. (Pepco), Baltimore Gas and Electric Co. (BGE) and Delmarva Power will see annual rate increases between 35 percent and 72 percent.

A typical electricity bill for Pepco residential customers will jump by 39 percent, or an average of $468 a year, starting June 1 under the newly set prices. For DPL customers, the price will rise by 35 percent, or $464, also on June 1. BGE customers will see an increase of 72 percent, or $743 annually, starting July 1.

The increases are a result of a competitive bidding process among electricity suppliers to provide what is called “standard offer service,” which is set at market rates as utilities buy power from wholesalers. The process is monitored by the Public Service Commission as well as the Office of the People’s Counsel, a state utilities watchdog group.

While the Public Service Commission expects the increases based on the bidding process, the agency still must approve the utilities’ requests.

Maryland deregulated its electric utilities in 1999, requiring full-service energy providers to separate their supply and distribution businesses. At the time, lawmakers cut residential electricity rates by 6.5 percent below 1993 levels and capped them for six years.

Since then, costs of fuels used to produce electricity, such as oil and natural gas, have increased, touching record-high levels in the days after Hurricane Katrina hit the Gulf Coast on Aug. 29. About one-third of the nation’s energy runs through the area’s damaged infrastructure.

“Unfortunately, high fuel prices resulting from the recent hurricanes in the Gulf region, terrorist threats and pressure from the global energy market have impacted the price of electricity,” Kenneth D. Schisler, chairman of the Public Service Commission, said yesterday.

Electricity rate caps expired for Pepco and Delmarva in 2004, with prices climbing both in 2004 and 2005. The caps will expire for BGE in July.

This is the first year since 1999 that standard offer service prices are being set without the caps.

“BGE does not control the commodity price and so this 72 percent is outside of BGE’s control,” BGE spokesman Rob Gould said. “The fact is we have not made one cent of profit since 1999 — it’s been strictly a pass through.”

BGE’s 1.2 million customers in the Baltimore area won’t necessarily feel the full impact of the increase. On Monday, the Public Service Commission announced a plan to spread the company’s electricity costs over a two-year period, during which time residential customers will see a portion of that increase — 21 percent — on their bills.

Under the delayed payment plan, BGE customers would pay less than the market rate for the first eight months. For the remaining months of the two-year plan, customers would have to pay extra charges to make up for the amount of their true bill.

Customers would have to pay 5 percent in annual interest.

Against its staff’s recommendation, the Public Service Commission ordered that all BGE customers would be automatically enrolled in the deferred payment plan, though they can opt out and pay the full market price to avoid interest payments.

On Friday, Pepco announced its proposed monthly rate increases for residential customers in the District of 12 percent, or $8.33 a month. The rate increases, which were based on a standard-offer-service auction, must be approved by the D.C. Public Service Commission.

Pepco has 745,000 residential customers in Maryland and the District.

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