This applies to the latest news prior to the rate stabilization legislation enacted in mid-2006. Proceed to the following link if you’re interested in learning the latest 2007 Maryland BG&E rate hike news .
Governor Ehrlich revealed a deal on Thursday where the shock of energy price hikes, an estimated 72% increase, would be spread out over 18 months (if you opt into it) instead of immediately hitting in July. In this new deal, customers are paying the same amount (there is no relief at all), it’s only spread out more. This deal does not save you money. The plan is a little complicated because how much customers will pay depends on whether a merger between Constellation and FPL Group Inc. of Florida succeeds. If it does, those who opt in (by default you are not opted in) will only see a 19% increase on July ’06 and then another 25% in June ’07 and then whatever increase is necessary to reach market rates in January ’08. If you opt in, you will pay a $15/mo. fee if the merger succeeds and $19/mo if it fails. Those who opt out pay no such fee. Basically the deal that supposedly died  a week or so ago went through, except it ignores all the sticking points.
How the deal work is BG&E will be borrowing money, $588M if everyone opted in, and customer’s fees would go towards paying the interest. So essentially you’re paying $15 of interest each month to borrow money from BG&E… a bad deal if you can sustain a 72% hike. This deal does not save you money.
These pretty much echo the thoughts of many of the legislators in this article . There is absolutely no actual financial relief in this plan whatsoever and Gov. Ehrlich turned an advantage on the consumer’s part into a weapon for the energy company.
“What’s really troubling about all this … you know we’ve had bills in the legislature that if the legislature passed, it would have allowed us, the consumers, and the working people to use the merger to leverage a better rate deal,” [Mayor Martin] O’Malley said. “Instead, what the governor and BGE are doing is using this 72 percent rate jolt to leverage their merger.”
And the question of consumers recapturing the depreciation Maryland consumers have been paying, an estimated $500 million, was also not addressed. Maybe we can take a little bit out of Constellation CEO Mayo Shattuck’s $40 million payday if the merger goes through.