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E-mails show ties of utility, Schisler

THE BALTIMORE SUN

Maryland Public Service Commission Chairman Kenneth D. Schisler discussed with a power company official how to get Republicans into the leadership of a national utility regulators association and how to draft legislation that would boost energy competition in Maryland, a new batch of recently released e-mail shows.

The November 2004 discussion took place when the official, Loyd "Aldie" Warnock, was working for Mirant Corp., an Atlanta-based company that owns three Maryland power plants rated by an environmental watchdog group as among the dirtiest in the nation.

Another group of e-mails dated earlier that year shows that Warnock played host to Schisler and his aides on a Texas hunting trip shortly before he left Houston-based Reliant Energy, where he had worked for decades.

Schisler said in an interview yesterday that his relationship with Warnock and other utility officials was proper. Part of his job is to foster competition among energy providers, he said, and Reliant wants to bring power to Maryland.

In an interview yesterday, Warnock said he respects Schisler and called Maryland's PSC "one of the best commissions in the country."

Critics who have called for Schisler's resignation in recent days said that the latest e-mails provide more evidence of a too-close relationship between regulators and industry at a time when the Public Service Commission has come under fire for not doing enough to protect Maryland consumers from an impending 72 percent increase in Baltimore Gas and Electric Co. rates for electricity.

The PSC "should be a consumer watchdog agency," said Brad Heavner, state director for the Maryland Public Interest Research Group, which works on clean-air issues and other topics that affect utility companies. "I wish I had the dialogue going with these guys and access like that that would allow our viewpoint to be heard.

"You are talking about collusion on national energy policy, on developing state energy policy," Heavner said. "People are asking, 'Is there collusion on these rates cases?' You don't want to jump to conclusions, but with a cozy relationship like that, you have to wonder."

Disclosure of the correspondence comes days after The Sun obtained e-mail between Schisler and utility industry lobbyist Carville B. Collins, revealing discussion of commission appointments and political strategy on utility deregulation.

In the e-mail, Schisler and the lobbyist discussed how to address criticism that the chairman had "lobotomized" the agency by replacing high-level staff members. They also discussed how to keep an energy deregulation plan on track despite expected criticism of rising rates.

Collins has not commented on the e-mail, but the disclosure has led one of his clients, Pepco Holdings Inc., to say it would reconsider its relationship with the lobbyist.

Electric rates charged by BGE are scheduled to rise an average of $743 per family when temporary rate caps expire in July. The caps were imposed as an interim consumer protection measure during a transition to a deregulated energy market. Lawmakers who passed a deregulation bill in 1999 expected prices to drop, but they have risen instead.

Gov. Robert L. Ehrlich Jr. and lawmakers are working on plans to reduce the rate increase.

Schisler, who defended his relationship with Collins as part of interactions with people from all sides of utility issues, said yesterday that a 2004 trip to Houston and his dealings with Warnock represent efforts to encourage retail utility competition in Maryland.

"The law requires the PSC to attract competitors to come to the market," he said. "Did I reach out to companies to try to get them to come to Maryland? Did I interact with them in a social way occasionally? Yes, but I should point out that I never took anything for free from a company."

Schisler noted that his relationship with Warnock, who once represented unregulated utilities, is distinct from how he interacts with utility companies in Maryland jurisdictions, which the commission is charged with overseeing.

"There is not a cozy relationship with the regulated companies that way," he said. "There is appropriate interaction. But I certainly would never discuss a pending matter with a regulated company."

But Warnock has been working for regulated companies since June 2004, when he joined Mirant as a senior vice president for regulatory and external affairs. Two Mirant plants in Maryland are among the 20 worst for sulfur dioxide pollution, and a third ranks fourth-worst in the country for nitrogen air pollution, according to the Washington-based Environmental Integrity Project.

Warnock resigned from Mirant in November 2005 and joined Allegheny Energy Inc. in January as vice president for external affairs. Collins is a registered lobbyist for Allegheny. But Warnock has not registered as a lobbyist in Maryland since at least 2004, state records show.

E-mails between Schisler and Warnock discuss a vacancy at the National Association of Regulatory Commissioners, a group to which Schisler belongs and which, according to its Web site, operates under a mission to ensure that telecommunications, water and electricity "are provided at rates and conditions that are just, reasonable and nondiscriminatory for all consumers."

In an e-mail, Schisler told Warnock of his desire that a Republican regulator - Laura Chappelle of Michigan - be named to head an association committee that oversees electricity policy.

"Not only is balance a fair objective, in light of the election it could be strategically important to the organization," Schisler wrote on Nov. 4, 2004, two days after the presidential election. "In fact, as unbalanced as things are now, not appointing a Republican would speak volumes about the culture of the organization."

Chappelle did not get the position, which went to a Democrat, Sam J. Ervin IV of North Carolina.

James B. Ramsay, general counsel of the national regulatory association, said that experience and seniority, not party affiliation, generally determine leadership positions.

"There might be association politics, but there are not partisan politics in NARUC," Ramsay said.

"I would respectfully suggest that it is unlikely that there is any great influence on NARUC appointments by a representative of industry, or an individual commissioner," Ramsay said.

But Schisler said that in 2004, nearly all of the organization's committee chairs were Democrats.

"My [goal] is to achieve philosophical balance on a committee like NARUC," he said, adding that the group needed more political diversity in its leadership ranks as it was making its case to Congress on federal energy legislation and the need for competitive energy markets.

Other e-mails include attachments of photos taken during a hunting trip in Texas, attended by Schisler, Warnock and Craig B. Chesek, chief of staff of the Maryland Public Service Commission and a former aide to then-Congressman Ehrlich. The photos were sent in February 2005.

According to the e-mails - portions of which were first reported by The Washington Post - a PSC employee wrote Warnock in March 2004 saying the group was interested in attending a Houston Astros baseball game during a trip to Texas.

And in early 2005, Schisler wrote a Reliant executive to obtain prime viewing spots during the inaugural parade of President Bush. Schisler was looking for spots for 13 people, including his wife, Chesek and two relatives, and Deputy Transportation Secretary James F. Ports Jr. and Ports' former aide from the legislature, Christine Nizer, who works for the PSC.

Warnock said yesterday that it is not uncommon for people representing various areas of the energy industry to interact.

"In the business we are in, you run across people in which you have things in common," he said. "My opinion is, we both enjoy hunting and I think we both have been in this industry long enough that we know where those lines are."

Sen. Brian E. Frosh, a Montgomery County Democrat who has called for Schisler's ouster, said he thinks the exchanges are inappropriate.

"He's right, there are some gray areas - it's not unethical per se for him to talk to people in the industry, but look at the whole thing together and what you see is a pattern that is pretty clear," he said.

Nevertheless, said Frosh, the chairman of an independent board should not place himself in a position where there is an appearance of impropriety.

"He's supposed to be the judge, he's supposed to be the umpire, he's supposed to be calling balls and strikes, and instead he's going to ball games and going on hunting trips," said Frosh. "The question I would have is, did he go on any hunting trips with people representing consumers? How often did he go to an Astros game with folks who were paying their utility bill every month?"

kelly.brewington@baltsun.com

david.nitkin@baltsun.com

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