BGE bid rejected by court


The Maryland Court of Appeals turned down yesterday a request filed by Baltimore Gas and Electric Co. to allow for immediate deregulation of the electric power industry in the Baltimore area - further delaying an average 6.5 percent rate reduction for residential customers.

The state's highest court opted to keep the original time line of delaying the start of deregulation in BGE's service territory at least until a hearing July 20.

The court set that hearing date after acting on an appeal filed by the New Jersey-based Mid-Atlantic Power Supply Association that challenged terms of a settlement approved in November by the Maryland Public Service Commission.

The association contends the plan favors BGE and will not provide for meaningful competition.

Late Friday, BGE filed an emergency motion for reconsideration of the court order.

In denying that request, the court said it will hear arguments relating to the stay, as well as MAPSA's right to file the appeal. BGE contends that MAPSA has no standing in the issue because, as a trade association, it will not be harmed by the settlement terms.

"We believe that the court clearly recognizes the need for rate relief and real competition," said Suzanne Daycock, MAPSA's executive director. "The court needs time, and we need time to educate the court on the issue if it is expected to act lawfully," she said.

Yesterday's court action "is a disappointment for our customers," said Robert S. Fleishman, vice president of corporate affairs and general counsel of Constellation Energy Group Inc., BGE's parent company.

"We are working very hard to try and settle the uncertainty," he said.

Meanwhile, BGE, the Office of the People's Counsel and the Public Service Commission are attempting to hash out how the region served by the utility - about 1 million residential customers in Baltimore and the five surrounding counties - will be billed.

Michael J. Travieso, head of the Office of People's Counsel, said that issue cannot wait until July 20 to be resolved.

The court-ordered delay prevents the 6-year, 6.5 percent average rate reduction, which was part of the deregulation plan and to be effective July 1, from kicking in.

Fleishman said BGE has "no choice under these circumstances" but to continue billing customers at the rates in place as of June 30.

In 1998, the people's counsel contended before the commission that those rates were too high. That was resolved with the rate reduction detailed in the settlement agreement.

Travieso said yesterday that if the utility continues with the old rates and if the court upholds the rate reduction, he will ask the commission to order the utility to refund customers any fees above the 6.5 percent rate with interest, retroactive to July 1.

"Our position is residential customers have to be held harmless," he said.

BGE said it disagrees and, late yesterday, Fleishman said the utility, the people's counsel and the commission agreed to work together to find a more amicable approach to resolve the issue.

Commission Chairman Glenn Ivey said he had been hoping the court would lift the stay immediately so the billing issue would not result in a dispute. "We will look at what the parties suggest and we will make sure everyone's rights are protected," Ivey said.

While the rate reduction is delayed, BGE said it will go forward with launching the Electric Universal Service Program - which was created by the state legislature to help needy Marylanders cope with utility bills - in its territory.

Also, BGE went forward with transferring its power plants - which produce 6,200 megawatts of electricity - to unregulated subsidiaries of its parent, Constellation. The transfer is the crux of Constellation's post-deregulation strategy of becoming a national power provider. The power generated by the plants will be sold on the wholesale market by Constellation Power Source Inc., a subsidiary that markets and trades electricity.

Fleishman said the utility received all necessary regulatory approvals to transfer those assets before the court issued the stay.

MAPSA officials said they question the legality of the transfer.

"It is my understanding in the motion that BGE filed before the Court of Appeals for emergency reconsideration that they understood they would be prohibited from moving forward with the asset transfer," said Daycock, the association's executive director.

"If indeed BGE has acted to transfer assets, I think there's a major question as to whether or not that transfer is legal," she said.

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