Ehrlich Faces Dilemma on Electricity Bill

Maryland Gov. Robert Ehrlich speaks to the Maryland Association of Realtors Thursday, June 15, 2006 in Linthicum, Md. Among the issues he touched on was the bill passed early Thursday by the Maryland State Legislature to blunt a proposed 72 percent increase in energy rates for residential BGE customers in Maryland. Ehrlich said Thursday he will hold a hearing before deciding whether to veto the bill that he opposed. (AP Photo/ Steve Ruark) (Steve Ruark - AP)

ANNAPOLIS, Md. -- The Maryland governor's race is being roiled by power politics.

Locked in a difficult re-election race, Republican Gov. Robert Ehrlich must decide whether to sign or veto a bill that would spare 1.1 million Maryland electricity customers from the full brunt of a 72 percent rate increase.

The first-term governor has criticized the terms of the bill, which was passed by the legislature Thursday during a one-day special session. But if he vetoes it, he risks alienating voters angry about the increase.

With all 188 seats in the Democratic-controlled legislature up for election this year and Ehrlich under fire from Democratic gubernatorial candidates Martin O'Malley and Doug Duncan, the stakes are high for both parties.

"If he doesn't sign it, the Democrats will really be able to make this a campaign issue," said Donald Norris, professor of public policy at the University of Maryland, Baltimore County. "Whoever wins the Democratic nomination ... is just going to spend months beating him up on this."

Ehrlich said Thursday he has not made up his mind about the bill and will hold a hearing next week to see what voters think he should do. "There's a lot of frustration. A lot of people want to be heard," he said.

Ehrlich was the first Republican elected governor of Maryland in 36 years when he defeated then-Lt. Gov. Kathleen Kennedy Townsend four years ago. Several polls over the past year have shown him running close to or a little behind O'Malley, the mayor of Baltimore, and Duncan, executive of Montgomery County in the Washington suburbs.

Electricity rates have been the dominant political issue since residential customers of Baltimore Gas and Electric Co. realized early this year that they would be hit with a 72 percent rate increase when a six-year freeze on rates ends July 1. The freeze was part of the deregulation of Maryland's power market.

The bill passed by the legislature would provide temporary relief. It limits the rate increase to 15 percent for the next 11 months. But rates would be allowed to rise to market levels in 2008. And customers would have to pay back the deferred amount of the increase with a small monthly charge over the next 10 years.

Hours after lawmakers passed the bill, Ehrlich made the rounds of conservative radio talk shows. He said that his own plan, which was held up when it was challenged in court, was better than the one produced by the Democrats.

He said his plan would have required BGE to return more money to ratepayers than the Democratic bill, a claim denied by Democrats.

The governor also complained that the Democrats put "very troubling" political provisions in the bill, including one that fires the Public Service Commission and requires him to appoint a new one from a list of candidates offered by legislative leaders.

The bill also fires the people's counsel, who represents utility customers at commission hearings, and transfers the power to appoint a new people's counsel to the Maryland attorney general, who is O'Malley's father-in-law.

While the new rate plan was developed by Democratic leaders, some GOP lawmakers voted for it. "I think this is a very consumer-friendly solution," Republican Sen. E. J. Pipkin said.

BGE and its parent company, Constellation Energy Group Inc., withdrew opposition after winning concessions from Democratic leaders. BGE spokesman Robert Gould said the company's desire was to help customers manage the transition to higher rates while maintaining its financial viability.

"This plan appears to meet that goal," he said.