From the Baltimore Sun
Consumers decry BGE rate deal
PSC hears dire scenarios; company defends offer
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Sun reporter
April 28, 2006
Consumers and advocates decried BGE's plan to defer part of its average 72 percent rate increase for residential customers at a hearing yesterday before the Public Service Commission, but company officials said it is the strongest offer they can afford.
Protesters carried signs reading, "Honk if 72 percent hurts" outside the commission's downtown Baltimore headquarters yesterday, prompting a cacophony of horns from cars headed down St. Paul Street.
Ratepayers who testified before the commission called the plan "genocide" and "terrorism," and Baltimore's city solicitor said the PSC is not doing enough to protect consumers.
"A lot of people are going to die because they are going to be lighting [candles] because they won't be able to pay their electric bills," said Baltimore resident Denise Lawry, predicting fires. "There are going to be a lot of seniors who are going to die because they're not going to be able to cool their homes."
The debate over the rate deferral plan that Gov. Robert L. Ehrlich Jr. negotiated with BGE has played out at the highest levels in Maryland, with legislators and candidates for governor jockeying for position in what has become an explosive election-year issue.
The commission took no action on the plan, but seemed favorably disposed toward it, asking few questions of BGE officials who testified and at times defending its provisions. Four of the five commissioners, including PSC Chairman Kenneth D. Schisler, are Ehrlich appointees, and the fifth is a former BGE executive.
Schisler promised a quick decision.
Yesterday's hearing was the first time that average citizens have had a chance to go toe-to-toe with electric company officials to demand a better deal on the rate plan. Residents, advocates, power company executives and others packed the PSC's 16th-floor hearing room in the state office building in Baltimore for a sometimes tense exchange that lasted nearly four hours.
Mark Case, a BGE vice president, spoke at the outset of the hearing, laying out the terms of the plan and saying that the company's offer "stretches the bounds of the balance sheet." Participating consumers would see their bills increase to market rates in stages over 18 months and would pay a monthly fee averaging $19 to make up for the deferred payments and interest.
"The company recognizes this is a large increase at one time and represents a hardship to many of our customers," Case said. "For some customers, a more gradual transition to market rates may be in their interests. We believe the amended plan ... is a very generous offer on behalf of our company."
Because of the way Schisler structured the hearing, BGE officials were not subject to questioning by any of the others who testified. Instead, the often angry residents and advocates directed their ire at the commission. That left Schisler to explain - and sometimes defend - the plan.
People's Counsel Patricia Smith, an Ehrlich appointee whose office is charged with defending consumers' interests before the PSC, and some of the commissioners joined Schisler in saying that the plan is an improvement over previous efforts to soften the impact of the rate increase because it offers customers a choice in how to budget for their electric costs.
Nearly all of the ratepayers who testified complained that the plan does not offer an actual reduction in cost. They said that an increase of 72 percent, whether it happens overnight or over three years, cannot possibly be considered generous. Whether or not customers choose to participate in the plan, they would pay roughly the same amount over three years.
"Cutting off my hands versus cutting off my feet is not a choice," said Kelly Bigelow, a Baltimore resident.
The rate increase is due this summer as a result of the expiration of rate caps instituted as part of Maryland's deregulation of the electric industry in 1999.
After a rate-deferral plan died in the last minutes of the recent General Assembly session, Ehrlich continued negotiating with the company and announced a new deal a week ago.
BGE has promised that if a merger between its parent company, Constellation Energy Group, and Florida-based FPL Group Inc., is completed, it will commit $600 million to rate relief over 10 years, an average reduction of $4 a month on a customer's bill.
Advocates and ratepayers at the hearing said the plan is confusing. The problem, several said, has been worsened by incomplete or misleading statements by the governor, power company officials and others.
"Only a day or so ago we learned that it included an interest payment, when the governor said there was no interest charge," said Susan Webster-Page of Baltimore. "This is serious business. It should be analyzed and not rubber-stamped."
When Del. Curtis S. Anderson, a Baltimore Democrat, questioned whether the rate increase is necessary, Schisler cut him off, directing him to confine his comments to the rate-deferral plan. Schisler defended the rate-making process as "consistent with statute."
The tensest exchange of the afternoon came when City Solicitor Ralph S. Tyler suggested that the commission look into whether Constellation is making large profits by selling electricity to BGE.
"Do you have any evidence of those charges?" Schisler said. "Those are very serious charges to levy without any evidence."
Tyler won a key concession earlier in the day in a separate hearing. The PSC's chief hearing examiner, Bryan G. Moorhouse, granted a request by the city and the International Brotherhood of Electrical Workers that Constellation disclose to them the bonuses that company executives would receive if the FPL merger goes through.
Moorhouse granted the request, provided that the city and the union sign confidentiality agreements. The IBEW already had agreed to do so, but the city had not. Moorhouse said that if the city and union believe that the material should be made public after reviewing it, they can come before him again to argue their case.
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