BGE-Constellation ties queried

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BALTIMORE — Gov. Martin O'Malley is asking the Public Service Commission to hold expedited hearings on a breakup of Baltimore Gas and Electric Co. and corporate parent Constellation Energy Group.

In a letter to commission Chairman Steven B. Larsen obtained by the Baltimore Sun, Mr. O'Malley said he is concerned that roles some executives play at both companies led BGE to pay more for electricity than it should have. Mr. O'Malley, a Democrat, also said he wants the commission to consider whether the utility's 1.1 million customers should receive rebates.

"We need to know whether the relationship between BGE and Constellation may have contributed to the rate increase faced by Maryland's consumers this summer," he said.

Mr. O'Malley campaigned heavily on the issue last year in his successful bid to unseat Gov. Robert L. Ehrlich Jr., a Republican, and promised to try to stop the increase. But in May, the commission appointed by Mr. O'Malley announced that it could do nothing to stop the increase and rates rose 50 percent on July 1.

Mr. O'Malley said he was sorry he could not stop the increase, then said officials would explore how the relationship between Constellation and BGE influences prices, adding that the 1999 deregulation law could be revisited.

Deregulation has not led to competitive markets in Maryland, and most customers still buy power from local utilities, which purchase electricity on the open market. In the past year, BGE purchased 70 percent of its power from Constellation.

In the commission's May report, it concluded that without changes in state law, "there may be limited opportunities to address the perceived inequities between Constellation's good fortunes and the higher prices now paid by consumers of electricity."

Mr. Larsen said hearings likely will start in September, as Mr. O'Malley requested, and steps are being taken to investigate the companies' relationship.

"There are possible or apparent conflicts between the financial interest of Constellation and the statutory obligations of BGE," Mr. Larsen said.

Constellation spokesman Robert L. Gould said the company would participate in such hearings.

"We continue to be confident that our rates reflect the true market price for electricity," he said. "They are the same if not lower than what other utilities are charging in Maryland and surrounding states in the Mid-Atlantic and Northeast."

Delegate Patrick L. McDonough, a Baltimore County Republican active on electrical issues, said Mr. O'Malley is on the right track and BGE should be an independent company.

Delegate Dereck E. Davis, a Prince George's County Democrat and chairman of the committee that handles electrical power issues, applauded Mr. O'Malley's interest, but said the focus shouldn't be on the companies' relationship.

He said BGE's rates are about the same as the rates in the District area from Potomac Electric Power Co., which does not have that kind of relationship with a corporate parent.

"That almost in and of itself supports the claim that it's the market and not some sort of nefarious relationship Constellation has with Baltimore Gas and Electric," Mr. Davis said.