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MD Electricity Rate Cap Legislation Dies

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Proposed legislation that would limit the rate hike in July for Maryland residents using Baltimore Gas & Electric (BG&E) power died yesterday. I’ve attached a Baltimore Sun article detailing it but let me just pull out the salient details:

The final offer (that was rejected):
On July 1st, instead of an average 72% hike (or around $743 per year), residents would see a 15% rate hike. One year later, the rates would increase an additional 20%. In the third year, we would be charged the full market rate for electricity. “Under the plan, BGE would have issued debt to make up for the deferred payments. BGE would have absorbed the interest charges, and customers would have been charged a monthly fee to repay the principal.”


Deal-breaker:

  1. Senate wanted the Public Service Commission to be replaced with a more consumer-friendly body, Gov. Erhlich selected 4 of the 5 members and didn’t want them “to be demonized or blamed.”
  2. Constellation Energy said any move to change the PSC was a deal-breaker because it represented “an element of uncertainty to the state’s regulatory environment, which could have hurt BGE’s bond rating…”

Other interesting points of note:

  1. There will be a Special Session of the General Assembly called to discuss this further though the prevailing attitude of the GA is that the differences were “deeply philosophical” and not time-related.
  2. “In the midst of the wrangling, a series of e-mails involving PSC Chairman Kenneth D. Schisler surfaced, showing him collaborating with a utility lobbyist, hitting up industry officials for baseball tickets and going on hunting trips with them.”

My thoughts:
This would’ve been decided earlier if not for the politics involved. Erhlich doesn’t want to look like a fool for appointing nearly all the PSC’s members even though it looks like the Chairman is in the pocket of the utility industry despite having the job of educating and representing the consumer. Constellation doesn’t want to seem like it’s bankrupting its customers with the 72% rate hike but can’t seem to find a way to limit the hikes without the ability to call it “deferred payments” where they eat the interest. Finally, the General Assembly is wielding the big stick and wants to change a PSC that really hasn’t educated the public and worked in their interest.

Also, the key point of investigating the over $500 million Maryland consumers have been paying for depreciation of power plants, that never lost value, seemed like a footnote in all of these discussions.

Obviously my vote is for the proposal because it helps the consumer. You reduce the pain of the rate cap removal and you reconstitute the PSC so it’s not taking power utility money. I’m sure the power companies are making enough money these days to pay their bills.

via Baltimore Sun.

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4 Responses to “MD Electricity Rate Cap Legislation Dies”

  1. Nick says:

    I wonder what all this is gonna mean for BGE’s neighbor to the west, Pepco. A know a lot of people out here who would be hurt by even a 20% rate hike.

  2. D says:

    As someone that used to work for the Maryland PSC as of last year, I can tell you I saw all of it coming. The sad part about this regulatory agency is that it is so politically influenced. When Ehrlich came into office, he replaced the Chairman, who in turn fired 4 of the directors at the PSC who shared a more “business oriented” view. This was all less than 2 years ago! There has been an apparent and clear turn for the worse at the PSC, which is the reason I jumped ship! With the current commissioners placed by Erhlich, this is what you can expect. I’m just glad it’s been brought to light — maybe this will keep them semi-honest.

  3. kritter says:

    My biggest fear is that not only will we be eating the 72% BG&E increase, the governor will tout the deferment plan that he worked out with the utility company as a victory for consumers (which it is not), and blame the General Assembly for their failure to reach an agreement before adjourning. I really wish they would have overridden Ehrlich’s veto on Constellation Energy’s merger with FP&L, because that was the only leverage that we had. Ehrlich has shown his true colors, and this issue will definitely hurt him come re-election time.

  4. jim says:

    I’m curious how he’s going to spin it because the Baltimore Sun hasn’t been too kind to him or the chairman of the PSC …


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