- The Washington Times - Sunday, June 11, 2006

ANNAPOLIS (AP) — State officials will be playing a high-stakes poker game when the legislature meets this week to try to come up with a plan to defuse voter anger over electricity-rate increases, and the man with the most at stake may be Gov. Robert L. Ehrlich Jr.

The Republican governor wasn’t in Annapolis when the seeds of the current crisis were sown with passage of a utility-deregulation bill in 1999. But that won’t necessarily protect Mr. Ehrlich as he asks voters this fall to send him back for a second term. When voters are unhappy and looking for someone to blame, the governor offers a tempting target.

“I think he’s going to suffer some of the blame whether he deserves it or not,” said Tom Schaller, a political science professor at the University of Maryland at Baltimore County.

“He’s not totally responsible for starting this issue, but he is going to be held accountable for how it’s worked out over the past year,” said Mr. Schaller, who is active in Democratic Party politics.

There are other people who can be blamed for the 72 percent increase in electricity rates scheduled to take effect July 1 for 1.1 million residential customers of Baltimore Gas and Electric Co.

Republicans take every available opportunity to point out that Democrats controlled the legislature and the governor’s office in 1999 when the decision was made to deregulate the utility industry and freeze BGE’s residential electricity rates at 1993 levels until this July.

James Gimpel, professor of government and politics at the University of Maryland at College Park, said he thinks officeholders could face retribution in the primary and general elections unless something is done to provide at least temporary relief from the huge rate increase.

“I think all incumbents are under pressure to make something happen,” Mr. Gimpel said. “I don’t think the legislature escapes accountability or responsibility by trying to stiff the governor on a solution.”

“All incumbents are facing serious threats. Voters will be watching this very closely,” he said.

Both political parties are maneuvering to try to be able to claim credit if the legislature can do something at the special session scheduled for Wednesday to mollify voters or to shift the blame to the other side if everything falls apart.

“It’s very important for the people of Maryland to remember how we got here, and that is because of [Senate President Thomas V.] Mike Miller and [then-Governor] Parris Glendening and the Democratic monopoly that brought us a flawed deregulation plan in 1999,” said Audra Miller, a spokeswoman for the Republican Party.

Democrats failed to address deregulation for seven years and have attempted to blame Republicans to cover up their own responsibility for the rate increase, she said.

David Paulson, a spokesman for the state Democratic Party, said the Republican claim that Democrats are responsible is “political rhetoric designed to deflect blame.”

“He’s had 3 years, he was well-briefed when he came into office, and he has provided absolutely no leadership since then,” he said.

Democrats and Republicans face a shared challenge at the special session. Their options are limited, and the pitfalls are numerous.

After 13 years of escalating energy prices and no increase in BGE residential electricity rates, a big rate increase is inevitable. BGE buys the electricity it provides its customers from generating companies, and it has the right to pass along its costs to consumers to remain a viable, profitable company.

The best the governor and legislature can hope to do is ease the pain by phasing in the increase while persuading BGE and its parent company, Constellation Energy Group Inc., to put some more money in the pot to reduce the burden on consumers.

But if they push too hard, they face a potential legal challenge from the utility companies and the possibility that a court might allow BGE to put the 72 percent increase into effect immediately or come up with some other unsatisfactory alternative that would hit voters just ahead of the election.

Mr. Miller said the legislature must be careful in restricting BGE’s rate structure that it not hamper the utility company’s ability to make a profit and remain a financially strong company. The company’s financial health is also important to Constellation’s plans to merge with a Florida company, FPL Group Inc.

Mr. Gimpel said the best bet for the governor and lawmakers would be to delay most of the increase until after the election. “They need to postpone it so it goes away as an issue and voters turn to other issues,” he said.

Unless the governor and legislature can come up with a better plan this week, BGE customers will have two options.

They can pay the full 72 percent increase on July 1. Or, they can the choose a phase-in plan that begins with a 21 percent increase on July 1 and ramps up to the full rate over two years. But customers who choose to phase in the rate increase would have to pay back the deferred amount, with interest, and would wind up paying out more money in the long run.

In a letter to Mr. Miller and House Speaker Michael E. Busch last week notifying them of his intention to call a special session, Mr. Ehrlich suggested they adopt a plan that was developed during negotiations in April involving the governor, legislative leaders from both parties and officials of BGE and Constellation. That plan died without coming up for a final Senate vote the last night of the session.

It would have given customers the option to choose a plan limiting the increase to 15 percent on July 1 and 29 percent the following June with all limits coming off Jan. 1, 2008. Customers would have had to pay deferred charges, but would not be charged interest.

Mr. Miller and Mr. Busch agree that any plan should start with a 15 percent increase next month, but they don’t want to stop there.

The two Democratic leaders are intent on getting rid of the five-member Public Service Commission, which includes four members appointed by Mr. Ehrlich. The commission has been the focus of much of the political rhetoric surrounding the rate increase.

Democrats criticize the governor for appointing members who they say have been more interested in protecting utility companies than looking out for consumers.

“At every opportunity, they’ve dropped the ball,” Mr. Busch said.

Republicans say the 1999 deregulation law stripped the commission of the power to regulate rates and that it has only done what it is required to do — sign off on a rate increase that allows BGE to recover its costs of buying the electricity it distributes to its customers.

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