Gov. Parris N. Glendening upped the ante in the electricity deregulation debate yesterday by calling for a 7.5 percent cut in residential rates, to last for five years, in legislation being written by the General Assembly.
The governor's proposed rate cut pleased consumer advocates and environmentalists, but drew skepticism from leading legislators, and opposition from utilities and businesses who contend that such a cut would be too deep and last too long.
With just four weeks left in the 1999 legislative session, Glendening is making a late entry into the electricity competition debate -- showing that he may be interested in passing deregulation, if it's on his terms.
"My grave concern, from over a year ago, is that it is the single-family homeowners who could end up the worse for this," Glendening explained in an interview last night. "We have a good opportunity to reach consensus, as long as my concerns are addressed."
In addition to calling for the rate cut, the governor offered a plan to protect the poor from losing service, and he is expected to unveil environmental proposals this week. But Glendening's specifics may be tough for top legislators and business interests to accept. His proposed rate reduction, which could save residential consumers more than $135 million a year statewide, received a cool reception in Annapolis yesterday.
Baltimore Gas and Electric Co. officials warned that they could go to court to fight such a mandatory cut, saying it may be illegal and could force worker layoffs. A coalition of industry customers contend that the cut in residential rates, combined with other proposed rate surcharges, would lead to higher rates for businesses.
In the governor's plan, a typical BGE residential customer could save $6.42 on what would otherwise be an $85.55 monthly bill. The rate reduction would take effect July 1, 2000. Overall, BGE's roughly 1 million residential customers could save $77 million a year on their electricity bills, according to an analysis for the Maryland Energy Administration.
Top legislators are wary of appearing unsympathetic to residential customers, but they agree with utilities and businesses that the Public Service Commission -- not the General Assembly -- should decide what rate cuts are warranted. House Speaker Casper R. Taylor Jr., an Allegany County Democrat, proposed yesterday that the PSC order a three-year rate cut of 2 percent to 7 percent.
"Hopefully, by the time the bill gets passed by the House and Senate, it will be obvious that cuts for consumers will be in the offing," said Senate President Thomas V. Mike Miller, a Prince George's County Democrat. "[But] I want to make sure that as we mandate a rate cut for consumers, that the cost of business does not go up as well."
The governor's chief lobbyist, Joseph Bryce, said Glendening wants to ensure that residential consumers see some benefits from deregulation, since big businesses will have the clout to negotiate cheaper rates.
"Let the big dogs go out and compete for their rate reductions," Bryce said. He stressed that, under the governor's proposal, the PSC could settle on a different rate reduction if utilities and other parties agree to it, or if the commission finds that one or more utilities would be "unduly" hurt financially.
But BGE spokesmen warned that ordering deep rate reductions could stifle the main purpose of deregulation -- competition -- since outside electricity suppliers would have a harder time offering lower prices.
The utility also contended that the cuts could be devastating to it.
"It's going to mean job losses," predicted Robert S. Fleishman, BGE's general counsel.
Glendening was unmoved by such warnings. "It is clear to us -- very very clear -- that these companies can absorb a 7.5 percent reduction, minimum, for a five-year period," he said.
Pub Date: 3/16/99