Push Is On to Defuse Rate Bomb
Friday, March 24, 2006
Maryland lawmakers moved yesterday to gain leverage in slowing down electricity rate increases with a first vote approving legislation that would give the General Assembly the power to block a merger sought by the state's largest power utility.
Under the bill that won a House committee's overwhelming support, an independent counsel would investigate, and effectively stall, the planned merger between Constellation Energy Group and Florida Power & Light Co. The legislature could then approve or reject the deal.
The measure, which would take the decision out of the hands of the state's Public Service Commission for at least one year, is meant to put Constellation's Baltimore Gas and Electric Co. on notice that lawmakers are serious about holding up the $11 billion deal until the company finds a way to scale back dramatic electricity rate increases this summer, lawmakers said.
"It's an opportunity for someone from the outside to make sure all Marylanders, not just big businesses, are getting a fair shake," said House Speaker Michael E. Busch (D-Anne Arundel), architect of the bill to create an Office of Special Counsel.
The pending merger has come under scrutiny in the weeks since lawmakers learned that electricity bills in Baltimore and the surrounding counties are expected to soar by as much as 72 percent, or about $742 annually. The rate increase comes as BGE lifts price caps that resulted from the General Assembly' s 1999 decision to deregulate the industry.
Pepco customers in Montgomery and Prince George's counties are on track to see annual average increases of $468 or 38.5 percent.
The House bill directs the attorney general to appoint a special counsel by May 15 to ensure that the merger is in the best interest of customers and to dig into the value of the company's assets. Legislators believe ratepayers are entitled to share in the profit of any deal after decades of investment in its power plants.
The counsel could hire experts and subpoena witnesses and would make a final recommendation to the General Assembly about whether to approve the deal.
Del. Dereck E. Davis (D-Prince George's) called the counsel a "second set of eyes" to help citizen legislators. "Quite honestly, we are overmatched in this particular process," he said just before the House Economic Matters Committee approved the bill 18 to 3.
Constellation called the move by the House "unfortunate."
"The fact is, we believe we have put forth a very strong and meaningful proposal," said Constellation spokesman Robert Gould. "Anything that creates an obstacle to the proposed merger has the very real potential of jeopardizing our ability to help defer the costs of our customers' electric bills."
BGE has offered to phase in about half of the increase over 15 months -- 13 percent in the first six months, 15 percent starting in January and another 15 percent in June 2007.