This column appears in the Friday, June 16, 2006 edition of the Gazette.
Barry Rascovar
Legislators patted themselves on the back for a job well done. Yet the flimflam we witnessed this week doesn’t hold up under close inspection. The details and long-range impact of the Democratic legislature’s answer to the electric rate increase controversy show that consumers are being conned.
Remember those howls of outrage from Senate President Mike Miller and House Speaker Mike Busch? They were furious at the Republican-appointed Public Service Commission for imposing a 21 percent electric rate rise on 1.2 million Central Maryland residents in July, with gradual monthly increases bringing the total increase by next April to 72 percent.
Miller, Busch & Co. also said a 5 percent interest payment on Baltimore Gas and Electric bills for 15 months was intolerable and could not be allowed to stand.
They assured us the overall 72 percent jump facing BGE customers would be dramatically reduced.
This is what these lawmakers told us. Now, let’s look at what the Democratic-controlled legislature actually did this week:
*Instead of an immediate 21 percent increase for BGE customers, it will be a 15 percent rise in July — a savings of a mere 6 percent — followed by as much as 57 percent more added to BGE electric bills next June.
*Instead of 15 months of interest payments, BGE consumers face 120 months of interest charges to pay off BGE’s borrowing costs.
*Instead of an overall rate increase for BGE customers of 72 percent, the grand total will be (drum roll, please) ... 72 percent.
That is not a misprint. After denouncing BGE’s rate hike and pledging to bring it down to affordable levels, Democratic leaders did nothing of the kind. They tossed a fig leaf in the form of a delayed rate increase over this embarrassment.
The unkindest blow was a 10-year interest payment plan. It’s bad enough when you pay off your car loan over six years. At the end of the day, at least you have a vehicle that’s worth something. Not so with the Democratic legislature’s BGE deferred interest-rate plan. For the electricity I use over the next 12 months, I’ll be writing checks for interest charges until 2017.
This is not a misprint, either. Unless I opt out of this plan next June, I will be paying off my IOU for 2006 electric power a decade from now. Even the opt-out provision is loaded with dynamite. It gives me the choice of an immediate 57 percent increase in my electric bill or a more gradual phase-in plan with much higher monthly electric rates plus interest charges.
Wow. That really helps consumers.
Even worse, the legislature has set the stage in future years for similar long-term, deferred payment plans. So I could be billed a second set of deferred charges in 2007, and a third in 2008, etc.
There’s more bad news contained in the bill. By moving to re-regulate BGE and other local electric distribution companies, the General Assembly has undercut the credit ratings of Maryland utilities, including Delmarva and Pepco. That could drive up borrowing rates for them with customers ultimately picking up the tab.
By making it far more difficult to consummate the merger of Constellation Energy and Florida Power & Light, the legislature may have killed the deal. This could have dire consequences for utility jobs in Central Maryland.
By moving to micro-manage electric power purchases, the legislature may have chased away power-generating companies that previously bid for business in this state. If that happens, it could mean much higher electric rates throughout Maryland.
By retaining rate caps until 2008, the legislature extends local utility monopolies for 18 more months. That locks the door on efforts to drive down electric prices through competition.
The black eye Maryland is getting nationally means that Aris Melissaratos, the state’s economic development secretary, can forget about wooing large corporations. What CEO is going to choose Maryland after the legislature’s harsh actions against CareFirst, Wal-Mart and now Constellation⁄BGE?
It’s a highly partisan bill designed to punish Republican Gov. Bob Ehrlich and his appointees and give Democrats a big political advantage, especially in the race for governor.
Ehrlich played his hand poorly. Yet given the anti-consumer aspects of this bill, he has an opening if he effectively communicates how Democrats turned consumer relief into a consumer’s nightmare.
The overreach of Democrats in this bill is stunning. In a dangerous precedent, they fired Ehrlich’s PSC and gave themselves appointment power. They fired the People’s Counsel because she was an Ehrlich appointee and gave that appointment power to the Democratic attorney general.
If those provisions are declared illegal by the courts, legislators still mandated the immediate dismissal of the current PSC.
Legislators interfered in the judicial process, too, dictating that any legal challenges must be heard in pro-Democratic Baltimore city — even though the legislation was crafted and approved in Annapolis.
There’s even a preposterous provision forbidding the governor or any state official from spending a dime of state funds to challenge any portion of the bill in court. It’s a power grab in the extreme.
That’s the Democratic legislature’s handiwork. Consumers get a bad deal but legislators will try to spin it the other way. In this case the devil, indeed, is buried in the details.
Barry Rascovar is a communications consultant in the Baltimore area. His Wednesday morning commentaries can be heard on WYPR, 88.1 FM. His e-mail address is brascovar@ hotmail.com.
