Howard County Maryland Blog

Local Politics and Current Events

BGE Rate Increases

Posted by David Keelan on Monday, March 13, 2006

Martin O'Malley had this to say:

Martin O'Malley stood across the street from the Public Service Commission offices and called for the resignation of Chairman Ken Schisler.

O'Malley, a democratic candidate for Governor says he is calling on Governor Ehrlich to appoint someone who is "competent" and put the "public" back in the title Public Service Commission.

O'Malley says the commission under Ehrlich has become a "lapdog for special interests." He wants to see the commission get rid of the 5 percent interest surcharge that will be tacked on for BGE customers when deregulation takes effect in July. And he is calling on the commission to come up with a spending plan for consumers in two weeks.

O'Malley says the Public Service Commission and not the Maryland legislature should be in the middle of working out the situation.

O'Malley was asked during the press conference if he felt conflicted about criticizing the current commission when his brother-in-law Max Curran was a former member during the Glendening administration. O'Malley responded by saying "I don't feel conflicted in it at all. In fact, he (Curran) was a good one. If there were Public Service Commissioners of his quality still on the PSC I doubt we'd be having this crisis right now. He never voted to raise utility rates 72 percent, never voted on charging hard hit consumer's 5-percent interest fee or any of those other things."

Well MOM, what was Max Curran doing on the PSC at the time? Did the PSC have any involvement or role in the deregulation of the electricty market in 1999? I will do some research and find out what Max Curran had to say on the issue, if anything at all.

Now Doug Duncan is telling us that "Ehrlich failed to protect consumers."

O'Malley is delighted because he has a distraction from his Crime Statistic Fiasco, and Doug Duncan is an equal opportunity basher. In other words they are taking advantage of the situation to blame Ehrlich for an issue of their Party's making.

What is all the fuss? Well if you don't know by now you live in a cave. BGE rate caps are being lifted shocking some rate payers with a 72% rate increase. Now BGE finds itself between a hard place and a rock.

Consumer advocates have criticized the company for raising BGE's rates when its corporate parent is earning record profits. Also, state lawmakers are threatening to interfere with Constellation's proposed $11.5 billion merger with Florida's FPL Group Inc. to form one of the nation's largest electric utility portfolios, unless the company does more to soften the arrival of deregulation, which was engineered in Annapolis in 1999.

1999!

Here we have 3 months before the rate caps expire and BGE takes what ever action they are going to take. I have no doubt that Maryland will do what the Democrats in the General Assembly and Government House designed in 1999. We are going to move to market rates.

The Baltimore Sun had a good Q&A article on this for consumers.

1. Question: How can electricity bills go up 72 percent overnight?
2. Question: Were BGE customers getting a bargain for the past six years? Compared to what?
3. Question: If BGE made money with rate caps,why can't it now?
4. Question: Can lawmakers or state utility regulators do anything to stop or roll back the rate increases?
5. Question: Is BGE going to get a profit windfall from the higher rates?

Bottom line. We have been getting a bargain price on electricity compared to the rest of the region. Now it is time to pay up. People think that Constellation Energy is gouging rate payers. Well that isn't the case. Even though they own BGE (they will be sending the bill since they send the power) Constellation Energy is in the business of producin power and selling it on the open market for the prices the market will pay. Now BGE will have to pay those market prices too and now so will we.

What were they thinking in 1999 when they capped rates. Did they think competitors would come flying into the market? Yes they did think that. I remember the hoopla because BGE was my customer at the time and I followed the legislation pretty closely because my business requires that I know my customer's business. Guess what? At first competitors did come flooding into the market. Guess what? They quickly found out that they couldn't make money with rate caps in place – so they left. Their business model wouldn't permit them to wait 7 years to start making money.

In 1999 the powers that be wanted electricty deregulation. Dan Rodericks gives a nice summary of the events in 1999 in his Sunday column "Where were they when the lights got expensive?" Even Dan the Man refuses to blame Ehrlich, but then again he isn't running for Governor either.

Here are a few things an interested reader might like to know, and something that O'Malley and Duncan should brush up on since they seem to have forgotten what happened in 1999.

State Senator Mike Miller, yes Senate President, was a lead sponsor of the legislation, as was Cas Taylor in the House. It was signed into law by Parris Glendening – Dan Rodericks calls it like it is on Parris ($30K). Maryland’s Democratically controlled Legislature has had six years to look back on deregulation and has done nothing thus making them the real culprit for the 72% price increase. So who failed consumers? Who is a lap dog for special interests.

When it comes down to it, who is going to solve this issue? The market I hope, but with a pliable Constellation Energy, and a Governor willing to do the right thing.

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3 Responses to “BGE Rate Increases”

  1. Anonymous said

    Republicans, however, were unanimous in favor of deregulation. They need to be careful lest they protesteth too much.

    See, for example:

    http://mlis.state.md.us/1999rs/votes/house/0870.htm

    http://mlis.state.md.us/1999rs/votes/senate/0774.htm

  2. hocoblog said

    The writer is certainly correct.

    Republicans are firm believers in free market principles and were naturally inclined to support deregulation of the electricity markets in 1999.

    However, in 2006 the Republicans are not the one’s behaving like Martin O’Malley and Doug Duncan, and trying to exploit the situation for political gain.

    Martin O’Malley’s comments are full of Blarney.

  3. Anonymous said

    O’Malley can’t rely on screwing legimate business over to cover up the promises he has not kept. Crime is rampant in Baltimore City and he is busy playing around in Annapolis and destroying the States Attorneys office that prosecutes the very people we need off the streets of Baltimore. O’Malley had better worry about the city and leave important issues like deregulation to the PRO’s. Dave thanks for pointing out the De Reg was brought to us by Parris Glendenning and the Democrat leadership in the Maryland House and Senate!

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