The Baltimore Sun

What the BGE increase is & isn't

Even BGE employees are probably having a hard time remembering what's going on. As we keep reporting, electric prices for the typical BGE home will go up 50 percent starting Friday. Here are some common questions about the change:

1. Are prices rising 50 percent after they already rose 72 percent last year?

No. Last year's widely reported 72 percent rise was held by the General Assembly to a 15 percent increase only. This week's 50 percent increase comes on top of that 15 percent, to attain a total, two-year increase of about 65 percent.

2. Why isn't the total, two-year increase 72 percent, as it was originally supposed to be?

BGE bought some of its juice for 2007-2008 last winter, when energy prices had dipped. So this year's price is slighly lower than what some thought it might be.

3. Is my total BGE bill going up 50 percent?

No. Just the electricity portion. If you're a BGE gas customer, that's a separate item. The 50 percent refers to the increase in your total electric bill, not just the "electric supply" portion that includes the cost of generation and cross-country transmission. The other major component of your electric bill is BGE's "distribution" charge for piping the juice across local wires. That has not changed. The increase in the electric supply price alone is more than 50 percent.

4. Should I take BGE's new deferral plan, which would keep the increase less than 50 percent for seven months?

I don't see any reason to unless you can't afford an extra $50 or $100 a month on your electric bill. The full, 50-percent pop is delayed only until the end of the year. And then you have to start paying back the part you deferred. Even though the loan is interest-free, the payback period is less than two years, which will make your electric bills bigger than normal in 2008 and 2009.

5. Deregulation was supposed to mean we could shop around for a rate lower than BGE's standard price. What are the alternatives?

As a practical matter, there aren't any right now. Because BGE locked up part of the next 12 months' supply when rates were lower last winter, competitors are having a hard time beating its "price to compare," which is 10.713 cents. (That's an average over 12 months for generation and transmmission.) For example, Commerce Energy's price to compare these days is 12.7 cents, which would cost the typical household an extra $20 a month. Washington Gas Energy Services is offering a two- or three-year deal for 11.3 cents, which would be smart to take only if you believe electricity prices will soar even higher.

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