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Assembly takes reins on electric deregulation fix

June 20, 2006

Electricity customers for Baltimore Gas and Electric Co. will get a two-year reprieve on a 72 percent rate increase, thanks to action taken last week by the Maryland General Assembly.

In passing the measure, the legislature rejected a deal worked out by Gov. Robert Ehrlich, who plans to hold his own public hearing today to review what lawmakers did.

That could lead to an Ehrlich veto, which would almost certainly be overriden.

As this all plays out, we hope voters don't forget that this failed effort to cut consumer costs through deregulation was championed by some of the same leaders now opposing Ehrlich's plan.

If they reject his ideas in favor of their own, lawmakers will absolve the governor of any responsibility for the plan's failure or success.

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Starting July 1, the legislature's plan would allow BGE rates to rise by 15 percent. That rate would be capped until 2008 and consumers would be charged about $2 per month for 10 years to cover the difference.

Ehrlich's plan would have allowed rates to rise by 19.4 percent on July 1, with a monthly deferral charge of about $14.

The governor's plan would allow consumers to skip the deferral plan and accept the full rate hike now, while the legislature's plan would not.

The more politically tinged part of the legislature's plan would replace the present members of the state's Public Service Commission. The governor could still appoint some of the replacements, but only from a list chosen by legislative leaders.

Once appointed, the new PSC members would be charged with investigating whether BGE's proposed 72 percent rate increase was justified and what effect BGE's proposed merger with another company would have on Maryland's electricity market.

All of this is relevant, even though this region isn't served by BGE, because Allegheny Energy's caps on residential rates come off in 2008.

As we have said previously, how this deal is done will provide a blueprint for what happens here. Paying attention now could be critical in determining what the region's power rates are when the caps come off two years from now.

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