Agreement Forged on Softening Energy Hikes

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By Matthew Mosk and John Wagner
Washington Post Staff Writes
Friday, April 21, 2006

Maryland Gov. Robert L. Ehrlich Jr. announced the terms of a tentative agreement with the state's largest power supplier yesterday that he said will help ease customers into paying a 72 percent increase in their electricity bills.

"Our number one priority has been working Marylanders," Ehrlich (R) said at an evening news conference on the front lawn of the governor's mansion. He laid out details of the complex deal while flanked by first lady Kendel Ehrlich and Lt. Gov. Michael Steele, who told reporters, "The weight seems to be lifting from the ratepayers of Maryland."

In fact, the weight is less lifting than shifting.

The deal described yesterday is similar to one Pepco announced two days earlier. Under the terms, which state regulators must approve, 1 million Baltimore Gas and Electric customers will be given an option of shouldering the entire 72 percent increase starting in July or phasing it in over 18 months. Those who choose to phase in the increase will have to pay additional charges of about $15 a month extra for the average customer over two years.

An additional $600 million in relief -- about $4 a month for the average customer -- would hinge on whether BGE's parent company, Constellation Energy Group, gets approval for a merger with a Florida power company. If not, customers who deferred rate increases would have to pay more interest.

That aspect of the deal brought immediate criticism from Ehrlich's two major political rivals, both of whom made their own efforts to address rising electric costs.

"Bob Ehrlich is asking Marylanders to opt-in to a loan shark deal that will cost Maryland families more than 72 percent in the long run," said Jonathan Epstein, Baltimore Mayor Martin O'Malley's campaign manager. He called the $15 monthly fee "Ehrlich's energy tax."

Montgomery County Executive Douglas M. Duncan (D) said it "falls woefully short of protecting the rate payers and does nothing to address the long-term implications of failed energy deregulation."

But Ehrlich heralded the deal as a major political and personal victory, describing how he spent the past 10 days in tense, late-night meetings "awash in spreadsheets."

The governor said it appeared at first as though ratepayers would be left with few options because the General Assembly adjourned April 10 without approving a plan.

Two days later, though, he said BGE officials returned to the bargaining table.

In the end, the governor said the agreement he brokered was only slightly less generous than the one left on the table when state legislators left Annapolis. That deal would have started the rate increases at 15 percent instead of 19 percent, and the monthly fee for deferred payments would have been about $3 monthly, not $15.


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