Power Industry Holds Firm on Rate Jumps

As Hearings Begin on Md. Proposals, Lawmakers Are Told Not to Intervene

Power industry officials warned Maryland lawmakers yesterday against meddling with planned electricity rate increases of as much as 72 percent, saying such efforts could result in less reliable service for customers, financial risk for companies and, at worst, California-style rolling blackouts.

Meanwhile, Republican Gov. Robert L. Ehrlich Jr.'s chief of staff met privately with four of the five members of the state's utilities commission to discuss options for lessening the sting for consumers, a meeting that drew criticism from Democrats who pointed out that the panel is both independent and subject to the state's open meetings law.

In the opening round of debate on a topic destined to dominate the last month of the General Assembly session, legislators considered measures to give consumers more time to pay rising rates, change the way companies buy power and embolden state officials in a pending merger that involves Baltimore Gas and Electric Co.

"Somewhere within all these bills there is a solution," Sen. Edward J. Kasemeyer (D-Baltimore County) said.

The Public Service Commission announced last week that the average household electricity bill for BGE's 1.1 million customers would rise $743 a year when rate caps expire in July. In June, the typical residential bill for Pepco's 500,000 residential customers is expected to increase 38.5 percent, or $468, a year.

Pepco offered its own proposal yesterday, saying it would allow customers to defer increases of more than 21 percent and spread out payments over 15 months.

The delicate negotiations that officially began yesterday with hearings in the House and Senate carry consequences for consumers and political implications in an election year.

On the same day, Ehrlich Chief of Staff Chip DiPaula Jr. met with the governor's four appointees on the commission in what DiPaula described as a "presentation of the facts" that are part of the governor's "aggressive pursuit of solutions."

Two former members of the commission called the meeting highly unorthodox and questioned whether it could legally be held without violating the Open Meetings Act.

"That's totally out of bounds for a regulatory agency," said Gail McDonald, a Democratic appointee who served on the commission until 2004.

Current commissioner Charles Boutin said there was no conflict with the public meeting law because the commission has already acted to approve rate increases. "We can discuss that order now with everyone," he said.

The discussion also raised questions about Ehrlich's business-friendly approach to governing and the hiring decisions his appointees oversaw at the Public Service Commission.