O'Malley Encouraging Utilities Commission To Assert Its Powers

The hearing on the 16th floor of the state government building in Baltimore was as charged as a cross-examination. Two Verizon officials were called to appear before Maryland's utility regulators to explain a 50 percent increase in customer complaints about their phone service. And from the first moment, it was clear a grilling was in order.

"What are you doing to improve the service?" demanded Steven B. Larsen, the new chairman of the Public Service Commission. Another commissioner, Lawrence Brenner, told the phone company representatives, "It helps if you come along willingly rather than be dragged."

Officially, the five-member panel that regulates gas, electric, telephone, water and sewage disposal services in Maryland is a lot less prominent than Cabinet agencies with larger staffs, budgets and portfolios. But as Wednesday's encounter with the telecommunications giant shows, it is emerging under Gov. Martin O'Malley (D) as an aggressive force.

In his campaign for governor last year, O'Malley criticized the commission under his predecessor, Robert L. Ehrlich Jr. (R), as too pro-business. Now, after appointing several new members, he's encouraging it to challenge rate increases and utility companies.

"These are necessities, not luxuries," Ralph S. Tyler, O'Malley's chief legal counsel, said of the utilities regulated by the commission. "They're services provided by a relatively few, very large entities. . . . It's supposed to work for the benefit of individuals who need the protection and assistance of government."

The commission under Ehrlich came under heavy fire after it granted a 72 percent rate increase to Baltimore Gas & Electric Co., Maryland's largest electricity provider. As a gubernatorial candidate, O'Malley, then mayor of Baltimore, successfully sued the commission for failing to hold a proper hearing on the rate increase and blasted it in his campaign to unseat Ehrlich.

Early in his term, O'Malley made a reconstituted commission a priority, pressuring Ehrlich's chairman to resign and tapping Larsen, a former state insurance commissioner who quashed CareFirst BlueCross BlueShield's controversial plan to convert to a for-profit company.

Along with Brenner, a former federal energy regulator, O'Malley appointed Susanne Brogan, a former commissioner who had served in the 1990s, and reappointed Harold D. Williams, the only commissioner under Ehrlich who had been picked by a Democrat. The fifth member, Allen M. Freifeld, was appointed by Ehrlich in 2004.

The new commission faces soaring energy costs, increasing demand for electricity and pressure to increase power from renewable sources such as solar and wind. Although state lawmakers delayed the BGE hike, rates jumped 50 percent July 1 after a 15 percent increase last summer. Many blame deregulation of Maryland's electricity markets, which has failed to create competition. Instead, it brought a backlash from consumers and a potential political problem for O'Malley.

"It's regulated industries that have a major impact on the lives and pocketbooks of every Marylander," said Del. Tom Hucker (D-Montgomery), a former director of Progressive Maryland, which fought the rate increases. "Deregulation was clearly a mistake. The most important thing is the posture of the commission going forward."

The governor has acknowledged that his administration could find no legal basis to roll back the recent rate increase, a political setback the commission has no power to address.

"We need to spend a lot more time understanding what happened, even though we don't have legal authority over it," Larsen said.