- The Washington Times - Wednesday, May 23, 2007

BALTIMORE — State officials reluctantly approved a 50 percent rate increase yesterday for the 1.1 million residential customers of Baltimore Gas and Electric Co., saying they had “little legal option” to defer or reduce the utility company’s proposal.

The increase goes into effect June 1. The Maryland Public Service Commission was critical of the way the transition to market rates had been handled, and commission Chairman Steven Larsen said he was disappointed an alternative couldn’t be found.

“These increases obviously can have a significant effect on the residents of this state,” Mr. Larsen said. “I think we all would have hoped that there would have been an opportunity to address that. At the end of the day, we’re bound by the facts in the law that are presented to us.”

The commission also approved BGE’s rate-stabilization proposal, giving consumers the option to choose a phase-in of the increase. Customers will have until June 30 to elect to defer a portion of the increase until January, when market rates will kick in.

For those deciding to put off paying full price, they will begin paying back, interest free, the amount that had been deferred from their June through December bills in April 2008. Their bills will go up about 38 percent, not including the recovery of the deferred charges.

All customers will pay market rates for electric power by January 2008.

The rate increases are the result of deregulation in 1999 that led to price caps. In July, the rate caps expired. When a proposed 72 percent rate increase was looming, lawmakers ended up in a special session to ease the increase. The so-called “stabilization plan” kicked in last summer, and lawmakers ordered the Public Service Commission to plan out a way to move customers to full market rates in January.

Mr. Larsen said the commission will be studying re-regulation between now and the end of the year, as directed by lawmakers.

The commission’s decision was made after extensive hearings, in which it “sought to pursue all possible avenues in areas of inquiry to determine whether there was any basis to legally defer or reduce the amount of BGE’s proposal,” according to the order.

But commissioners weren’t able to find one — except those that either would continue rate caps, or that would invalidate procurements conducted with the approval of the commission at the time. That, the commission decided, could bring expensive litigation with little chance of success.

“We believe neither option is in the public interest,” the commission said in a summary of its 106-page order.

The rate increases became a big campaign issue last year in the race between former Gov. Robert L. Ehrlich Jr., a Republican, and current Gov. Martin O’Malley, who sharply criticized the commission. After Mr. O’Malley was elected, he moved swiftly to oust the former chairman, replacing him with Mr. Larsen. Mr. O’Malley, a Democrat, also named two other commissioners to the five-member body.

Republicans pounced on the rate increase to criticize Mr. O’Malley.

“O’Malley’s pledge to hold the line on rate increases and help working families was a false campaign promise,” said Maryland Republican Party Chairman James Pelura.

But Rick Abbruzzese, a spokesman for Mr. O’Malley, said the commission’s order “makes clear that the way energy has been purchased in Maryland has favored big utilities over consumers.”

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