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MD Electricity Rate Cap Legislation Dies

Posted By Jim On 04/11/2006 @ 1:40 pm In Personal Finance | 4 Comments

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 [3].


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[3] Baltimore Sun: http://www.baltimoresun.com/news/local/politics/bal-te.md.rates11apr11,0,3123045.story?coll=bal-home-headlines

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