- The Washington Times - Thursday, March 9, 2006

Maryland lawmakers introduced a flurry of legislation to stop electricity rates from soaring this summer after a state agency said Tuesday that residents would see their bills rise by as much as 72 percent.

“I don’t know a person in the legislature right now — both parties — that isn’t giving this the utmost of attention,” said Sen. Thomas M. Middleton, Charles County Democrat and chairman of the Senate Special Commission on Electric Utility Deregulation Implementation.

“There’s a concern here, what with the rising cost of fuel, home heating oil, interest rates going up and everything else, that this increase could be the financial straw that breaks the back of the consumer,” Mr. Middleton said.

Delegate Pat McDonough, a Republican who represents Baltimore and Harford counties, is sponsoring one of more than a half-dozen bills that would cap rates or defer payments. His legislation, which has attracted 54 co-sponsors from both parties, would prohibit electric utilities from raising rates by more than 5 percent over the previous year’s rate.

“It’s outrageous. … Consumers will not be able to handle this,” Mr. McDonough said. “It’s going to be up to the General Assembly to do something like this because we go out of session April 10 and if my bill does not pass it’s going to be like Dodge City without a sheriff in the state of Maryland.”

Under the bill, electricity providers would be allowed to recover the remaining costs over a five-year period, during which time customers would pay an additional “service transition charge.”

“If [customers] had to pay the full amount up front the first year, it may mean losing a home or not having the ability to pay their life insurance or health insurance,” Mr. Middleton said. “Even though it may cost them more in the end, at least we can help put something in place that will help them get through.”

Residential customers are expected to see a jump of 35 percent to 72 percent in their electricity bills starting this summer, according to the Public Service Commission. The increase is a result of a competitive bidding process through which Potomac Electric Power Co. (Pepco), Baltimore Gas and Electric Co. (BGE) and Delmarva Power buy electricity at market rates.

A Senate bill sponsored by Sen. Edward J. Kasemeyer, a Democrat from Baltimore and Howard counties, would extend through 2007 BGE rate caps that are scheduled to expire June 30.

Mr. Kasemeyer’s bill would prevent electric utilities from charging customers more than 20 percent over the previous year’s bill. A deferred-payment plan structured similarly to Mr. McDonough’s, the bill allows companies to recover the total rate through additional charges spread over five years.

Mr. Middleton said he supports extending the BGE rate caps pending a review by the Public Service Commission, the state’s utility regulator, the power companies and the Maryland attorney general.

Republican Gov. Robert L. Ehrlich Jr. was “shocked and deeply concerned” by the rate increases and is investigating ways to reduce the impact on consumers, spokeswoman Shareese DeLeaver said yesterday.

The power companies blame the increases on higher prices of natural gas and other commodities that produce electricity.

“Where the prices are on the open market would be the determining factor in what our rates would look like,” said Pepco regional President Thomas H. Graham.

Mr. Graham said Pepco plans to work with lawmakers and the Public Service Commission.

“Hopefully what doesn’t come about from this are people starting to blame other people because when deregulation came about, everyone thought they were doing the right thing,” he said. “What we didn’t anticipate was [Hurricane] Katrina, Rita, other rising fuel costs and increased demand internationally.”

While the company is “open” to deferred payment proposals, Mr. Graham said he was concerned that the company would have to borrow millions of dollars, which would hurt its bond rating. In addition, consumers would have little incentive to conserve energy.

Maryland deregulated its electric utilities in 1999, capping rates at 6.5 percent below 1993 levels and staggering when the caps would be removed. The rate increase for BGE is particularly high because its current rate caps, which have been in effect since 2000, are set to expire June 30. Caps on Pepco and Delmarva expired in 2004; Pepco raised rates in 2004 and 2005.

On Monday, the Public Service Commission adopted a plan that would spread out the costs for BGE customers over two years, during which time they would see a 21 percent increase during the first eight months. Customers would pay extra charges for the remaining months to make up for the amount of their true bill.

“It’s a virtual certainty that we’re going to reach some solution before the legislative session expires,” said Delegate Dereck Davis, a Democrat who is chairman of the Economic Matters Committee, which handles utility legislation. “It’s not an ‘if’ but ‘what.’ We have a general idea of what we want to accomplish but the devil’s in the details.”

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