- The Washington Times - Wednesday, April 5, 2006

ANNAPOLIS — General Assembly leaders yesterday braced for a showdown with Gov. Robert L. Ehrlich Jr. at the close of the session Monday, when lawmakers likely will override vetoed bills that would block a multibillion-dollar merger for Baltimore Gas & Electric Co. (BGE).

Lawmakers from both parties aim to force the power company to cut a 72 percent increase in electric bills this summer. But BGE executives say interference in the merger will end rate-reduction talks, spur court battles and accelerate higher energy prices.

“Monday is going to be the day from hell,” said Senate President Thomas V. Mike Miller Jr., Prince George’s County Democrat. “There is going to be a lot of angst, a lot of anger and a lot of unkind things are going to be said.”

Senate Minority Leader J. Lowell Stoltzfus said lawmakers appeared locked on a collision course with the power company and Mr. Ehrlich, a Republican who was optimistic yesterday that he could negotiate lower rates without merger threats.

“It could potentially be a real mess,” said Mr. Stoltzfus, Eastern Shore Republican.

Sen. George W. Della Jr., Baltimore Democrat, said his colleagues were prepared to nix the $11 billion merger of Constellation Energy Group, which is BGE’s parent company, and Florida Power & Light.

“We are going to pull the trigger,” he said. “These [power company] folks are used to dealing behind closed doors in a board room, and now they are dealing in a public arena.”

Meanwhile, Moody’s Investors Service yesterday downgraded BGE’s bond ratings, citing expectations the company would post weaker earnings for several years due to a deferral of electricity rate increases.

Democratic leaders have rejected the power company’s offer to take a $375 million loss and phase in the rate increase to market prices over two years.

“We want to give rate relief to our customers,” said Robert L. Gould, communications director for Constellation Energy. “But at the same time we have to ensure that BGE remains financially strong.”

Regulatory lawyers say blocking the merger is illegal, and the power company has vowed to sue.

The litigation could take years, effectively blocking the merger but also potentially triggering an immediate 72 percent rate increase that lawmakers are trying to avoid.

The governor has three bills on his desk that would affect the power company’s business:

• One would block the merger, appoint a special counsel to investigate the transaction and give the legislature oversight of the deal.

• Another would block the merger and the rate increase until BGE returns $528 million its customers paid as part of the 1999 deregulation agreement under then-Gov. Parris N. Glendening, a Democrat.

The returned money would have to be used to offset the 72 percent increase in rates, which amounts to about $750 million to be paid in a year by BGE’s 1.1 million residential customers.

• The third bill would replace the governor-appointed Public Service Commission, which regulates utilities, with a commission appointed mostly by Democratic leaders.

Under Maryland law, the governor has to sign or veto the bills by the end of the day tomorrow or else they automatically take effect.

The General Assembly would have until the end of the legislative session at midnight Monday to override the vetoes, unless the leadership opts to extend the session.

The governor, the legislature’s leaders and power company executives are slated to return to talks tomorrow.

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