- The Washington Times - Friday, April 7, 2006

ANNAPOLIS — Lawmakers yesterday rejected another deal that would have phased in a massive electricity-rate increase, prompting Maryland Gov. Robert L. Ehrlich Jr. to say he would extend the legislative session to resolve the crisis.

Mr. Ehrlich, a Republican, said “we are going to stay here until it gets done” after lawmakers spurned the latest offer by Baltimore Gas & Electric Co. (BGE) to phase in a 72 percent rate increase that is set to take effect July 1.

Still, the governor said yesterday afternoon that he was “more optimistic than I was this morning.”

Mr. Ehrlich said that rate-reduction talks with BGE executives have “made significant progress” and that the negotiations would continue over the weekend.

The Democrat-controlled General Assembly, which is scheduled to adjourn Monday, is seeking more concessions from BGE executives.

The power company yesterday morning offered to raise rates by 15 percent to 18 percent this summer and by the same amount next year, then increase rates to market value in 2008.

“I am optimistic there will be a settlement,” Senate President Thomas V. Mike Miller Jr., Prince George’s County Democrat, said after an afternoon meeting with the governor and House Speaker Michael E. Busch, Anne Arundel County Democrat. “We are closer than we were.”

Meanwhile, Mr. Ehrlich yesterday vetoed three energy-related bills that lawmakers had intended to use as leverage against BGE to reduce energy rates:

cOne would block Constellation Energy Group, BGE’s parent company, from consummating an $11 billion merger with Florida Power & Light Co. The bill calls for appointing a special counsel to investigate the transaction and giving the legislature oversight of the deal.

• Another bill would block the merger and the rate increase until BGE returns $528 million its customers paid as part of a 1999 deregulation agreement under then-Gov. Parris N. Glendening, a Democrat. The money would help reduce rates for BGE’s 1.1 million residential customers.

• A third bill would replace the governor-appointed Public Service Commission (PSC), which regulates utilities, with a commission appointed mostly by legislative leaders.

That bill prompted a lawsuit Thursday by PSC Chairman Kenneth Schisler, who challenged lawmakers’ authority to fire him and give themselves control of the agency.

Power company executives have called the bills “deal breakers.” They say the legislation, if enacted, would end rate-reduction talks, spur court battles and accelerate higher energy prices.

prompted a lawsuit Thursday by PSC Chairman Kenneth Schisler, who challenged lawmakers’ authority to fire him and give themselves control of the agency.

Lawmakers say they have enough votes to override the vetoes, a threat that remains key to the negotiations.

Mr. Miller said neither the Senate nor the House would override the vetoes if a deal is reached on the rising rates. He also said he did not know what it would take to satisfy enough lawmakers to seal that deal.

Mr. Busch said the merger threat is “absolutely” on the table.

“Reducing the cost to the ratepayers is what it comes down to,” he said.

The General Assembly has until the end of the legislative session to override the vetoes, unless the session is extended.

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

BGE’s rates have been capped below market prices under the 1999 deregulation deal.

Staving off “rate shocks” has become the hottest issue in a year in which Mr. Ehrlich is seeking re-election and every General Assembly seat is open in November.

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