Utility Agency E-mails Show Industry Ties
Chief Wrote Lawyer About Staff 'Lobotomy'

By Matthew Mosk and Ann E. Marimow
Washington Post Staff Writers
Saturday, March 18, 2006

The head of the independent board that sets electricity rates in Maryland exchanged a series of candid e-mails with a Pepco lawyer last year in which he describes his decision to fire five senior staff members as giving a "lobotomy" to his agency.

Kenneth D. Schisler, chairman of the Public Service Commission, said yesterday that his comments were a "cynical" reference to how Democrats characterized upheaval at the regulatory agency. His e-mail is one of several that appear to show an industry lawyer's close connections with Schisler and Gov. Robert L. Ehrlich Jr. (R).

A printout of the lengthy e-mail exchange, first produced in conjunction with a lawsuit filed by a fired agency employee, was given to The Washington Post yesterday and authenticated by Schisler.

The document also offers a look at the inner workings of an agency that has come under fire during the past several days after it approved substantial rate increases for Baltimore Gas and Electric Co. and Pepco.

Democrats have said they believe Schisler had worked to dismantle the professional staff and said yesterday that the "lobotomy" remark is confirmation that they were right.

Many of those fired -- including the chief hearing examiner, chief engineer, director of accounting investigations, manager of external relations and public information officer -- were longtime aides considered more consumer-friendly than those who replaced them.

In a Feb. 7, 2005, e-mail to utility lawyer Carville Collins, Schisler wrote: "I am putting data together for our budget hearings in the event someone goes after me on the 'lobotomy' I performed on the agency. I think we have a record to stand on and if they go after me, I can defend."

In an interview last night, Schisler disputed the Democrats' interpretation, saying the term was a shorthand reference to what he considered Montgomery County Sen. Brian E. Frosh's "insulting" characterization of the firings.

"It wasn't me," he said. "I don't have the personal view that I performed a lobotomy." The former Eastern Shore delegate said he was anticipating questions about his dismissal of five employees at a budget hearing and "worried someone would seek to make an issue of the personnel changes and paint me as someone who had fired all the good people."

Democratic lawmakers said yesterday that other aspects of the exchanges may be even more troubling in that they show a close relationship between the state's chief regulator and the industry he regulates. The exchanges with Collins, a lawyer who represents nearly a dozen utilities, are written in a breezy tone and discuss such matters as the health of Schisler's wife.

"These e-mails raise a thousand questions," said House Speaker Michael E. Busch (D-Anne Arundel). "The answer to all of them is: The fix is in for the industry. There's no one left to advocate for the citizen ratepayer."

Schisler said yesterday that he has known Collins as a professional acquaintance for 15 years.

"We make decisions on the facts, but it doesn't mean you can't be friendly and cordial with the colleagues you work with," he said. "There's nothing in any of these e-mails that shows me working with Mr. Carville on any matters pending before the commission."

The e-mail release comes as Schisler's commission is being criticized because it announced electricity bills would increase by as much as 72 percent for Baltimore Gas and Electric customers. Pepco customers would see a 38.5 percent increase.

Democrats have blamed Ehrlich for reshaping the commission to be more business-friendly. Ehrlich has pointed the finger at Democrats who, in 1999, passed legislation that limits industry regulation.

When Ehrlich was asked about the e-mails yesterday, he said he had not seen them. When a reporter offered him a copy, he said he would not review them. Collins did not return phone or e-mail messages.

In one e-mail, Collins says he's having "lunch at the mansion with the governor" and asks if there's "anything you want me to mention to him?"

In another, Collins tells Schisler that the commission chairman had received "high praises" from executives of Pepco Holdings Inc. during a meeting with the governor. He said the Pepco officials volunteered that "no one at PHI thought you could have transformed the agency this much in 2 years. They also explained that accomplished professionals were flocking back to the Commission from the private sector, which the Gov did not seem to know too much about."

Schisler replied: "Thanks for the report. You made my day."

They also discuss a possible commission appointee, whom Ehrlich selected two months later, and Schisler stresses that Collins is one of the few people who has heard her name.

And they discuss strategy for handling the potential fallout from rate increases, and Schisler asks Collins to prepare the governor for the possibility that Senate President Thomas V. Mike Miller Jr. (D-Calvert) would turn the issue into "a political football."

Miller called the exchange "sad."

"What's shocking about this is that the PSC members are supposed to be clean as a houndstooth," Miller said. "They're supposed to be judges. They're supposed to give the people of Maryland a fair shake."

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