ANNAPOLIS – As the Maryland Senate wound up its morning session Thursday, Sen. Leo E. Green, D-Prince Georges, stood to tell his colleagues that he’s worried and more than a little frustrated as well.
“We’re at the top of the ninth inning,” he said, “and we don’t have the last at bat.”
The night before it was Sen. George W. Della, D-Baltimore.
“I’ve sort of come to the conclusion that we don’t have a snowball’s chance in hell on this,” he told his colleagues. ” . . . We need help here.”
The issue tormenting both legislators seemingly came out of nowhere this session: an impending rate increase by the Baltimore Gas and Electric Co. that will drive up the utility bills of hundreds of thousands of Central Maryland customers by an average of 72 percent.
With slightly more than two weeks left in the session, legislators are still struggling to come up with a solution that is both politically palatable and economically viable. But by mid-day Thursday none had emerged, and anxiety is rising.
“Finding a middle ground is going to be very, very difficult,” said the Senate president, Thomas V. Mike Miller Jr. D-Prince George’s.
Proposed solutions range from phasing in the full rate increases over the next year to statewide reregulation of electric utilities.
Gov. Robert L. Ehrlich Jr. has repeatedly said that the 72 percent increase “will not stand.” Both Miller and House Speaker Michael E. Busch, D-Anne Arundel, have promised that the Legislature will help find a fix. Even BGE, which to the annoyance of some legislators has flooded the capital with lobbyists, has offered a plan phase in rate increases.
There is unanimity, perhaps, on only one thing: an answer needs to be found before Ehrlich, his lieutenant governor, Michael S. Steele, and those members of the Assembly who are seeking reelection go home to face the voters.
Both Miller and Busch have said that the solution ultimately needs to come from the governor’s office, as the governor has sway over the Public Service Commission, which regulates the state’s public utilities.
But political considerations – notably the upcoming gubernatorial race against either Baltimore Mayor Martin O’Malley or Montgomery County Executive Doug Duncan – are making Ehrlich reluctant to step in, Miller said in an interview.
“I think he is afraid to get involved,” Miller said of the governor. “He knows there’s going to be rate increases. He’s afraid O’Malley and Duncan will say it’s not enough.”
Henry P. Fawell, an Ehrlich spokesman, declined to say whether the governor, legislators, BGE and the PSC were any closer to reaching a consensus on a plan, but said progress is being made.
“Every discussion we have had to date has been productive,” he said. “The governor is in close and consistent contact with all parties involved.”
Legislators and BGE have put a myriad of options on the table.
Earlier this week, BGE proposed raising prices by only 13 percent initially and then phasing in increases over the next 15-months. Their plan would provide customers with some help – $150 million of the at least $200 million the company will save in a planned merger with Florida Power & Light – but would also charge a $4.40 monthly interest fee.
BGE President Kenneth W. DeFontes Jr. said he could not comment on the status of the proposed plan or a compromise.
“We made a commitment with the group that we’re working with we will come to an agreement and we made a commitment that we will do it privately,” he said.
Legislators have proposed several more extreme options, including reregulating electric utilities, putting the brakes on the merger with FPL, forcing BGE to return $528 million in “stranded costs” and giving counties the power to buy and distribute electricity.
At a Senate Finance Committee hearing Tuesday, Green called a reregulation bill he introduced “the nuclear approach to it,” but also said that “if you talk to any of our constituents, this is the bill they want.”
Representatives from BGE and Pepco urged legislators not to reregulate, saying that it will be difficult for them to buy back power plants and readjust to a regulated environment.
Still, legislators said that if electric company representatives do not provide a viable alternative plan or work with them to create one, they are going to have to make a decision on their own.
Reregulation “may not be so far out 20 days from now,” said Sen. Edward J. Pipkin, R-Eastern Shore.
Pipkin introduced a bill Wednesday that would halt the FPL merger and put a hold on rate increases until BGE returns the $528 million the legislature gave the utility as a part of the 1999 deregulation agreement. The money was meant offset anticipated depreciation of power plants.
Since then, the power plants have actually gained value because of increasing energy costs.
Several other bills now in the legislature would require the General Assembly to approve the merger, a circumstance Miller called “a definite possibility.”
In a Wednesday briefing before the Senate Finance Committee, Cynthia Marlette, general counsel for the Federal Energy Regulatory Commission, which oversees energy company mergers, said that legislative oversight of a utility merger would be a first.
“I’ve never heard of a state legislature saying that a merger should not move forward,” she said.
Another proposal is one that would give counties and other municipalities the authority to directly purchase electricity for their residents. If a county or a group of counties chooses to become an electricity aggregator, residents would have to opt out of the program to buy power elsewhere.
Sen. Thomas M. Middleton, D-Charles, the chairman of the finance committee, said that giving counties the authority to buy electricity is a risk for BGE, but may be a temporary solution for consumers since BGE’s bid to provide standard service to customers came at a time when fuels were particularly expensive.
“This is an extraordinary event,” he said. “They (BGE) bid . . . at the highest part of the market.”
Whatever the plan, legislators and BGE will have a hard time winning back the trust of consumers, Sen. Delores G. Kelley, D-Baltimore County, told BGE representatives at a Tuesday hearing. “This whole state, practically, feels that we haven’t been treated fairly,” she said. “They believe that we are all crooks.”