- The Washington Times - Monday, March 27, 2006

BALTIMORE — Gov. Robert L. Ehrlich Jr. yesterday accused lawmakers of ignoring a statewide crisis of escalating electric bills while they move to block a multibillion-dollar merger that would affect only Baltimore Gas & Electric Co. (BGE) customers.

“The House [of Delegates] has lost focus and is now focused on a merger that only affects 20 percent of Marylanders,” Ehrlich spokesman Henry P. Fawell said. “All Marylanders deserve access to affordable electricity, whether they are customers of BGE or not.”

The House yesterday voted 111-25 for a bill that gives the legislature veto power over a proposed $11 billion merger of Constellation Energy Group, BGE’s parent company, with Florida Power & Light.

Since the rate increases were announced March 7, Mr. Ehrlich, a Republican, and the Democrat-controlled General Assembly have focused on reducing a 72 percent increase in BGE bills scheduled to start this summer.

Yesterday’s comments indicated for the first time that the governor’s plan to reduce energy prices includes cutting a 39 percent increase by Potomac Electric Power Co. and a 35 percent increase by Delmarva Power. Administration officials declined to discuss details of the plan.

Power company executive have vowed to sue if the state interferes with the merger. Constellation stock fell 90 cents, or 1.16 percent, to $54.88 yesterday amid uncertainty about the merger.

Lawmakers say they need authority over the merger to force BGE to lower its rates.

But others in the General Assembly want the merger stopped regardless of what happens with the rate increases, saying Constellation is “selling out” consumers for corporate profits that will go to Florida.

“We are serious about looking at this merger in depth,” said Delegate Pat McDonough, Baltimore County Republican. “Remember that all this deregulation was based on a big lie called competition. Now there is not competition, there is consolidation.”

Senate leaders say the bill has a “good chance” of passing in their chamber.

Mr. Ehrlich remains opposed to government interference in the merger, which places him at odds with Republican lawmakers.

“It is unprecedented,” Mr. Fawell said. “When you meddle with a merger of this magnitude, you also meddle with the 6,000 jobs that BGE and Constellation bring to Maryland.”

BGE executives warn that stopping the deal could kill the company’s plans to phase in the rate increase over 15 months and use cost savings from the merger to later reduce rates by $150 million.

They also say the price controls being debated could bankrupt Maryland power companies and cause power shortages like those in California in 2000.

However, Senate Minority Leader J. Lowell Stoltzfus said drastic measures such as preventing the utility merger may be the only way to protect consumers from the failed deregulation policy created by Democratic leaders.

“The reality is that deregulation has created a huge problem, and we have to respond,” said Mr. Stoltzfus, Eastern Shore Republican. “As much as I am in favor of letting the free market work, I am concerned that the merger will cost consumers more.”

The increases are partly the result of a 1999 deregulation plan approved by the Democrat-controlled General Assembly and signed by then-Gov. Parris N. Glendening, a Democrat.

The plan included rate caps that kept electric bills artificially low for the past six years and discouraged competition from entering Maryland’s partially deregulated utility market.

The caps for BGE expire in July. The caps already have expired for Pepco and Delmarva Power.

Last summer, residential customers paid an average of 11.72 cents per kilowatt-hour in the Mid-Atlantic region, according to the Edison Electric Institute, an electric-utility association.

However, BGE customers paid an average 9.251 cents per kilowatt-hour last summer, according to the Maryland Public Service Commission, which regulates utilities.

BGE’s planned increase to 14.834 cents per kilowatt-hour should bring its prices up to current market rates, said Jason Cuevas of the Edison Electric Institute.

• This article is based in part on wire service reports.

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