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BGE rate solution could aid Allegheny Energy customers

May 18, 2006

All those living in areas served by Allegheny Energy should pay close attention to attempts by Maryland legislative leaders to deal with power increases planned by Baltimore Gas and Electric Co.

Come 2008, when Allegheny's residential rate cap is lifted, local residents will certainly face higher costs for electricity. How the BGE issue is resolved will probably provide the blueprint for any action taken to persuade Allegheny not to charge as much as it could for power.

After BGE announced rate increases that would average 72 percent for its 1.1 million residential customers, House Speaker Michael Busch and Senate President Thomas V. Mike Miller began looking into the matter.

They claim they have gotten little cooperation from BGE officials, who have been asked for information that would justify the size of the increase.

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This week the two lawmakers told The Associated Press that they might use the legislature's subpoena power to get the information they say they need.

The facts they seek include the price BGE will pay its parent company, Constellation Energy Group, and how much executives of both companies might get if Constellation's proposed merger with the FPL Group of Florida goes through.

Busch and Miller also fault the state's Public Service Commission, which they say should have demanded information from BGE.

The PSC will hold hearings on the proposed merger in July, the same month that the rate cap comes off for BGE.

Could the PSC have done more? Perhaps, if the legislature had been paying attention.

Electricity deregulation passed in 1999, with the utilities involved agreeing to rate caps as the price of getting the legislation passed.

The cap for Allegheny's commercial customers came off in January. Eastalco in Frederick, Md., closed, laying off more than 500 workers when it could not find more affordable power. Others, such as Mack Trucks, were able to make bulk power purchases.

Re-regulating Maryland's power utilities would be difficult, since part of the 1999 legislation required them to divest themselves of their generating plants.

Will the generating companies now poised to get higher returns be willing to accept less? Could Maryland legally force re-regulation just because state lawmakers are having "buyer's remorse" seven years later?

How lawmakers and BGE answer those questions might help forestall problems here.

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