Carlton Sickles, the lanky former congressman who chaired the General Assembly's two-year study of utility regulation, was greeted by knots of spectators shoving for space when he entered a Senate hearing room this month to deliver his commission's book-thick package of proposals.
But as Sickles read his long-awaited report on the laws governing state telephone, gas and electric companies from the oaken lectern of the Economic Affairs Committee, the only interested faces around him belong to Baltimore taxi drivers, who were irked by a tangential proposal by Sickles' 27-member commission on the management of their affairs.
In fact, even the 18 utility industry lobbyists in Annapolis -- who normally hover over every movement by the legislature on utility matters, however slight -- left blank the testimony lists on the report of Sickles' Commission to Study the Public Service Commission Law. For after holding dozens of hearings and spending nearly $100,000 studying the issues surrounding Maryland's soaring telephone, heat and electricity costs, this select state panel decided, in essence, that nothing of significance needed to be done.
That conclusion, backed as it was by the authority of an official commission appointed by the governor to resolve years of debate over utility rates and services, had a significant impact on the handling of utility rates and services by the legislature, which this year, as before, killed nearly every consumer-oriented utility proposal it considered.
And it caused utility company executives and lobbyists around the state to breathe a collective sigh of relief. "I was surprised," said Jim Doyle, a lobbyist who was one of four industry representatives on the commission. "I thought at first we would have a lot of trouble -- I was concerned that the quest for new concepts and new ideas would take over. But that wasn't the result."
Consumer advocates both in and outside the legislature were dismayed by the commission's work, which, as Doyle indicated, originally was expected to produce broad new state policies for governing utility companies, which are officially regulated by the five-member state Public Service Commission.
On two of the most important issues the commission considered -- the method by which requests for utility rate increases are judged and the way heating and electricity costs are charged to low-income families -- the positions of the utility industry prevailed.
Further, some legislators are saying, the commission's strongly worded recommendation that the legislature no longer involve itself in the details of rate-making for utility companies is being used by lobbyists and conservative legislators as a means of attacking every consumer-oriented bill introduced this year on utility matters.
This story is an attempt to examine the work of the Public Service Law study commission, and how it determined, much like dozens of other such panels formed by the legislature over the year, what the state's approach should be to a sensitive and complicated problem -- in this case, rising utility costs.
What this panel did, in the course of 35 meetings over two years, was to review, section by section, all of the current law setting out the Public Service Commission's ability to set rates for utility companies, regulate their services and study their effectiveness.
Sickles and most other commission members are pleased with what they accomplished. "We looked at the system and decided it was essentially proper," Sickles said.
"If the perception was that we were going to reinvent the wheel, or invent a better wheel, then some people are probably disappointed," added Doyle.
"But I was convinced that what was on the books was adequate and proper."
Although most other commission members agree with Doyle, several are saying, in retrospect, that their panel -- and its conclusions -- may have been tilted toward the interests of Doyle and the three other industry representatives on the panel. For like most other state commissions, the Sickles panel was really composed of two groups. One was the balanced, carefully selected 27 members appointed by the governor in 1977. The other was the core of 10 or 11 who attended the meetings and made the decisions. Of those, at least five were wholehearted backers of utility company views.
The balanced panel conceived by the legislature in 1977 was supposed to consist of seven state senators, seven delegates, the PSC's director and people's councel, four utility and industry representatives, two consumer advocates, two citizens and two representatives of utility company employe groups, in addition to chairman Sickles.
However, if the study commission is reduced to those members who attended 75 percent or more of meetings, here is how the group was really weighted: two delegates, the two PSC representatives, Sickles, one citizen, and the four lobbyists and executives.
Of this group, the one "citizen," Wilson Stringer, a former manager of the PSC, unabashedly aligned himself with the utility company interests. "I voted with Doyle most of the time because I believe in the real world," Stringer said recently.
At a commission meeting last summer, Stringer declared himself as "someone who has taken one H of a lot of abuse from consumer groups and others . . . when there was no justification for it." Consumer groups, he added, "will go out of their way to throw dust in the air."
Time after time when the commission met to vote on the issues of utility regulation, the four industry representatives and Stringer -- whose collective attendance record over the two year period was nearly 90 percent -- were there at the table, well supplied with documents, statements and preprinted proposals, while almost all the legislators and in the end, the consumer advocates, were nowhere to be found.
"It was unfair," said Del. Kay Bienen (D-Prince George's), a moderate-to-conservative on utility issues who attended all of the commission meetings and was one of its principal contributors. "The utility people won some things they wouldn't have won if the others had shown up. And nobody who kept missing had much of an excuse."
"The commission really consisted of 10 or 12 members, and I had some concerns about the balance," said House Majority Leader Donald Robertson (D-Montgomery), who also had a perfect attendance record. "I think we suffered as far as the consumers were concerned because of (the absence of the consumer representatives) during the late meetings."
The two consumer advocates appointed to the panel, Sylvia Hancock and Nancy Erwin, both worked diligently through much of the commission's tenure. But both were absent during a last series of meetings last summer and fall when the commission decided most of its important issues. Erwin was ill, and Hancock resigned to take a job with the Federal Energy Regulatory Commission.
"Some of the zest certainly went out of the opposition when they left," Doyle observed recently.
A half-dozen legislators whose votes could have made the difference failed to attend more than half of the commission's meetings. Among the worst offenders were Del. Larry Young (D-Baltimore City), and Sen. Clarence Blount (D-Baltimore City), who attended less than a third of the time.
Sen. Victor Crawford (D-Montgomery), attended less than half the meetings, while Sen. Melvin Steinberg (D-Baltimore County) missed 15 of the first 16 meetings, then resigned. His place, like that of several legislators who quit, was never filled.
In meeting after meeting, the absence of the legislators, citizens and consumers, combined with the careful preparation and agressiveness of the industry spokesmen, seemed to make the difference, commission transcripts show. i
One night last August, for example, the commission's subcommittee on economic analysis, which was charged with composing a section of the report explaining the causes of high utility rates, got into a debate that aptly exemplified the problem.
Doyle, a member of the five-man committee, arrived at the first meeting with an outline of an eight-page statement, prepared by the utility companies, which was the industry's proposed draft of what the report should say.
Stringer had also prepared figures showing the cost to utility companies of federal income taxes over the years, among other problems. Soon discussion gravitated toward how the drafts would be combined into a subcommittee report.
Then someone raised a nettlesome question: Was the subcommittee opening itself to criticism by working with a document prepared by the utility companies, while not bothering to solicit any such material from consumers or other groups?
"What bothers me," said Stringer, "is someone coming along and saying -- and don't misunderstand me, Jim -- that this is tainted a little bit. They might say: 'You listened to the utilities. They told you what they thought should go in. What did you obtain from other groups?"
Subcommittee member F. C. Robert Hollmann, an industry representative jumped to Doyle's defense. "I don't see anything wrong in receiving documentation of the utility industry's thinking on this subject," he said "Nobody says we have to use it, and if we use it, it -- it forms an outline, probably, on the subject matter."
But subcommittee chairman Meyer Emmanuel, a former Prince George's state senator, was disturbed, and suggested -- much to the dismay of Stringer and Hollmann -- that the comments of consumer groups be solicited.
"I will . . . try to think out, for example, how we could get Ralph Nader's group to submit a statement," Emmanuel began.
"Oh, come on," said Hollmann.
"Well, we have here in Maryland -- " Emmanuel tried again.
"Come on," interrupted Hollmann.
Emmanuel finally said he knew of a consumer group called the Maryland Action Committee.
"They are now down the tube," replied Hollmann.
"You're going in the wrong direction," Stringer told Emmanuel. "One of the things that . . . displeases me about the way some of the other [subcommittees] have operated is that we sit there and have a parade of people come in . . . and I was hopeful that . . . we would arrive at our report just based on our own attendance and views here."
Before the subcommittee meeting had ended, Stringer, Hollmann and Doyle had extracted a pledge from Emmanuel not to seek out statements from consumer groups on the causes and problems of high utility rates.
And when the final commission report was printed, the section explaining the problem of high utility rates contained, in fact, six pages of facts and figures on the rising costs of fuel, labor and taxes for utility companies, but nowhere did it speak of how much rates for consumers rose or how the public was affected by the soaring bills.
Instead, the report simply noted: "The Maryland General Assembly and the Governor have been sympathetic and responsive to the concerns of the Maryland utility consumer."
But it was not simply in the subcommittee that Doyle, Hollman and the other industry representatives won their points. Repeatedly, the commission deferred to the white-haired, stern-faced Doyle before making important decisions.
On several occasions, for example, the commission postponed votes on drafts of legislation just to allow Doyle to return to what he called "my people" for approval, disapproval or comments. At the next meeting, Doyle often would offer amendments drawn up by the utility companies, or simply state their position forcefully before votes were cast.
"I once pointed out to him that all of us had constituencies we were representing, and no one waited for us to go back to them," remarked Robertson.
Nevertheless, the transcripts show that Doyle emerged as the commission member to bargain with on important proposals.
When the commission reached the question of the rate structures of utility members, including Erwin, Bienen, and PSC people's counsel Jack Keane, tried to draw up a proposal for "lifeline rates," one of the most important consumer utility issues of the last five years.
For years, consumer advocates have attempted unsuccessfully to get the legislature or the PSC to force utility companies to change their rate structures so that low-and moderate-income families would pay less. Currently, the "declining block rates," used by the utility companies tend to favor large users, such as industries, over smaller ones.
Utility companies and Maryland industry lobbyists have battled fiercely against such "lifeline" rate proposals. In 1976, for example, when 101 of the House's 141 delegates sponsored a lifeline bill, the outcry from these special interests was to great that the measure eventually was killed in committee.
When the ad hoc group had drawn up its own proposal for the study commission on lifeline rates, they decided they had to take it to Doyle before introducing it to the commission.
"That was like asking the dog if he wanted a leash," said Doyle. "I thought the rate structure was adequate the way it was."
Without Doyle's cooperation, the ad hoc group attempted to get the full commission to study its proposals on lifeline rates. They were quickly rebuffed. "The votes just weren't there," said Bienen. "Maybe if some more of the legislators had shown up, they would have been."
Instead, the commission decided that the issue of lifeline rates was better left up to the PSC. For that matter, the commission concluded, neither it nor the legislature should involve itself in what was termed "the details of ratemaking" -- or the criteria and process through which price increases are granted to utilities.
Although the entire commission ended up agreeing with that philosophy, some members said that, in view of the panel's inaction on lifeline rates, its resolution of the most controversial question to come before it -- the controversial rate-increase procedure called "make-whole" -- was somewhat puzzling.
The make-whole rate procedure was enacted by the legislature in 1977 as a way of allowing utility companies to obtain quick streamlined rate increases. Its provisions, which were opposed by the state PSC members even before they were enacted, allow a utility to apply for a rate increase on the basis of technical accounting issues only, rather than the wide range of issues studied by the PSC in a regular rate case. The PSC is required to answer the company within 90 days.
Since 1978, the PSC has been attempting to persuade the legislature to repeal the make-whole provision, arguing that it forces them to grant almost automatic rate increases to utilities, regardless of whether commissioners feel the increases are justified.
Since the make-whole provision took effect in July 1977, utility companies have taken full advantage of it, filing two out of every three cases under it. Their success under make-whole has been dramatic. In the only two major regular rate cases heard by the PSC since 1977, utility companies obtained only 14 percent in one instance and actually had their rates reduced in the other. Compare that with the seven major make-whole cases that allowed companies to obtain 31 percent to 100 percent of the increases they requested.
In the most recent case in suburban Maryland last April, Pepco obtained 74 percent of a requested rate hike from the PSC under make-whole. A year earlier, Pepco had asked for an increase in a traditional rate case, and had ended up having its rates reduced by the PSC.
And in January, Washington Gas Light obtained 82 percent of the rate hike it asked for under a make-whole case. In a case filed just a year earlier, the company had obtained 100 percent of what it wanted.
"On the surface, make-whole is an emotional issue because it implies an incestuous relationship between the utility companies and the PSC," conceded Doyle, make-whole's biggest defender on the study panel.
The PSC representatives on the study commission and the consumer advocates argued for repeal of the provision, which they said is hopeless flawed. Nevertheless, the commission eventually decided to reject the PSC's judgment and compromise with the utilities. Make-whole was retained with three amendments that Sickles said are "relatively minor."
"After deciding that the legislature shouldn't interfere with the practices of the PSC, we took this make-whole provision and rammed it down their throats," complained one commission member.
Once again, the personal dynamics of the commission played a crucial role in the decision. Twice, the transcripts show, Doyle was able to delay the commission's action on changes to make-whole he opposed by saying he couldn't vote until he "got back to my people."
In the most crucial meeting, Doyle's intransigence on this point caused the commission to reconsider a vote it had taken minutes earlier to repeal the make-whole provision in its entirety and substitute minor amendments to another law allowing utilities quick rate hikes.
The absence of Hancock and Irwin, the two consumer advocates, was strongly felt. Hancock, an expert on utility accounting who was a leading advocate of make-whole repeal, was present until the meeting when the commission voted to repeal the provision, then resigned. Irwin missed all of the make-whole discussions because of illness.
"With them gone, I was kind of cornered," said PSC people's counsel Keane, who was left as the only knowledgeable member of the commission working against make-whole. "I had less floor ability."
Commission members who helped shape the eventual compromise, including Robertson, Bienen and Doyle, now say they are satisfied that the panel adopted the most reasonable course, and say that if the consumer advocates had been present, they might have agreed to it."
But Emmanuel, who made the original motion that make-whole be repealed, indicated another reason the commission may have compromised. "I knew that if we repealed make-whole," he said, "the utilities would have been back in Annapolis this year with a bill to put it back in. And the legislature would have decided it."
With the utility industry's tacit support, the make-whole compromise bill have overcome all opposition from consumer advocates in the legislature this year. Meanwhile, the Environmental Matters Committee has killed the only bill that the commission proposed by industry lobbyists on the commission.
"Our major objective on the commission," Doyle said of the utility companies, "was to allow the make-whole provision to remain on the books as written. The companies aren't happy with [one of the] amendments. But they've decided they can live with what was done."