Judge Orders a Review of BGE Rate-Relief Plan

By Ann E. Marimow
Washington Post Staff Writer
Wednesday, May 31, 2006

A Baltimore judge ruled yesterday that the state's embattled utility regulators failed to act "in the public interest or with fairness to customers" when they approved a plan to ease Maryland households into higher electricity rates this summer.

The order from Circuit Court Judge Albert J. Matricciani Jr. sends the rate-relief plan back to the Public Service Commission for review, allowing critics of the plan to reopen the question of whether the 72 percent rate increase approved for Baltimore Gas and Electric Co. in March was ever justified.

"We don't accept that a 72 percent rate increase is necessary," said Baltimore City Solicitor Ralph S. Tyler, who filed the suit on behalf of Mayor Martin O'Malley (D). "If you consider all these facts, we believe you'll find that there are ways to provide rate relief to ratepayers."

Matricciani's order means the PSC must give O'Malley and others the opportunity to cross-examine witnesses and explore issues such as the proposed merger of BGE's parent company with a Florida power company and the potential savings for customers from that $11 billion deal.

Robert Gould, a BGE spokesman, said last night that the company was still reviewing the implications of the judge's order. In general, he said, "we see this as a step closer to resolving the issue, and we urge the PSC to deal with this matter in a prompt fashion, given that time is of the essence."

Under the rate-relief plan, negotiated in April by Gov. Robert L. Ehrlich Jr. (R) and BGE, the company's 1.1 million residential ratepayers could have phased in the increase over 18 months -- starting with a 19 percent increase in July instead of the full 72 percent.

Ehrlich criticized O'Malley's lawsuit and the court's decision yesterday, saying it would jeopardize rate relief and leave more than a million households with a huge electric bill July 1.

"I welcome all specific and credible recommendations that further benefit hardworking families," said Ehrlich, who might face a challenge from the mayor this fall. "Regrettably, neither Baltimore City's leadership nor state lawmakers have offered anything of the sort."

But in his 10-page ruling, Matricciani took the Public Service Commission to task, questioning why the regulators had not done more to question BGE's costs for buying energy and the potential benefits from the merger in the context of the rate increase.

"In fact," he wrote, "it is difficult for the court to conceive of the commission conducting an adequate review of the relevant facts and circumstances" without answering many of the questions raised by the city.

In recognition of the tight timeline, the judge gave utility commissioners two options: extend rate caps or work under the July 1 deadline and offer a phase-in plan approved in March.

Rising electricity rates throughout Maryland reflect increased costs and the state's transition to a less-regulated energy market. Under the deregulation plan approved by the General Assembly in 1999, utility companies agreed to cap rates for several years.

Christine Nizer, a spokesman for the appointed regulators, said the commission "still believes it acted appropriately in attempting to mitigate rate increases for customers, but we certainly respect the court's decision."

Nizer said the commission acted under limits put in place by the deregulated system created by legislators. She said it was too soon to say how the commission would proceed.

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