BGE deal focus of race for governor

THE BALTIMORE SUN

Gov. Robert L. Ehrlich Jr. stood on the lawn of the governor's mansion last month and sought to bring an emphatic close to the hottest issue in the state: He had promised to reduce Baltimore Gas and Electric Co.'s 72 percent increase, and he said he delivered.

But as far as Baltimore Mayor Martin O'Malley was concerned, the fight to protect ratepayers had just begun.

No matter what Ehrlich claimed, the 72 percent stood, O'Malley said, and where the governor's Public Service Commission had failed to look out for consumers, he would. He pledged to fight, sending his city solicitor into court to try to get a better deal that would include reconsideration of the rate increases by the state Public Service Commission, a body he wants to reconstitute. His case was bolstered yesterday when the executives of three large counties in BGE's service area sided with the mayor.

This is hardly the first time the Republican governor and the Democratic mayor who wants his job have squared off on high-profile public policy. They have fought over control of the city schools, crime-fighting, juvenile justice, university funding and bus routes.

But the stakes now are much higher.

This time, they're competing to lead Maryland through a crisis that will hit the pocketbooks of 1.2 million people months before the next election.

Also weighing in is Montgomery County Executive Douglas M. Duncan, a Democrat who says Ehrlich and O'Malley are too beholden to BGE, because of copious campaign contributions, to tackle the issue. He is calling for a special session of the General Assembly to re-regulate utilities.

With voters poring over every twist and turn in the BGE saga, each has the chance to shine as the leader who came through for his constituents or fail as the man who played politics with people's lives and lost.

"Is it resonating with voters? Absolutely," said Arthur Murphy, a veteran political consultant from Baltimore unaffiliated with a gubernatorial candidate. "Who are they blaming? Everybody. Everybody who holds elective office."

Some BGE customers say Ehrlich is the only one who has put a plan on the table. Others say O'Malley is the only one who is really fighting the utility company. Duncan's views may not be resonating as much - because few BGE customers live in the Washington suburbs - but he keeps trying to offer solutions. Many, however, said they don't see anyone solving the problem.

"BGE customers are being held hostage because the government is politicking its way through ... to see which one is going to win, and it's horrible," said John A. Frederick, a military and civil service retiree from Glen Burnie. "It's a lot of lip service in the press: 'Yeah, we're going to do this, we're going to do that.' The bottom line is, what are you gong to do? Let's figure it out and get it done, period. What's the increase? How much is it going to cost? Because that's what most people are concerned with.

"I'm going to take it with me to the polls."

BGE electric bills will rise 72 percent after the July 1 expiration of rate caps instituted as part of Maryland's deregulation plan.

The higher bills also coincide with the attempts of BGE's parent company, Constellation Energy, to merge with Florida-based FPL Group, Inc., a deal that has generated skepticism among many consumers. Ehrlich supports the merger, saying it would keep jobs in the state and allow the company to offer customers rate relief.

Many political observers - including some Republican politicians - say they're surprised that Ehrlich took the side of the company in the merger. He also declared himself a "neutral arbiter" in negotiations with the company and tempers all his comments about rate relief with a caution that any plan must protect BGE's bottom line.

One of the leading voices against the rate increases and the BGE-Constellation merger, Baltimore County Republican Del. Patrick L. McDonough, said the governor shouldn't be singled out for blame but that the merger is a mistake.

"I wanted this to be a nonpartisan issue," he said. "This is really about consumers. Consumers were really facing two problems, the 500-pound temporary gorilla of a rate increase and the 1,500-pound never-go-away gorilla of a sell-out merger."

Sen. James Brochin, a Baltimore County Democrat and inveterate door-knocker who represents a bipartisan Towson-area district considered key to the governor's re-election chances, said the BGE issue is uppermost in voters' minds.

"In a lot of ways, this is a very simple issue: You are either on the side of the utility or you are on the side of the consumer," Brochin said. "And [Ehrlich] has shown he is on the side of the utility."

Ehrlich campaign manager Bo Harmon said he sees the governor's handling of the BGE situation as more evidence of his abilities as a leader and another solid plank in his case for re-election. Voters know that the legislature caused the problem with the 1999 deregulation vote and failed to solve it, Harmon said.

"People certainly recognize the difference between paying a 19 percent increase and a 72 percent increase, knowing the governor was not responsible for causing the problem," Harmon said. "Yet, like so many other problems left to him by [Gov. Parris N.] Glendening and the legislature, he solved it to the best of his ability."

Ehrlich's deferral plan was unveiled a few weeks after the April 10 conclusion of the Assembly session. It gave participating customers a 19.4 percent increase in their bills on July 1, with more increases spread over 18 months to bring them to market rates. Those customers will also have to pay monthly fees - about $19 for the typical customer - for two years, starting in June 2007.

Those who choose to take the plan would have lower bills for 11 months but would then pay more than they would have otherwise for the next two years. Over a three-year period, customers would pay about the same total either way.

"The legislature blew it back seven years ago, and also this year," said Dan Donald, a Catonsville retiree who voted for Ehrlich in 2002. "Ehrlich tried to accomplish something. Right or wrong, he put something on the table."

Sensing a political opportunity, O'Malley has become a leading critic of the current PSC, calling months ago for the resignation of its chairman, Kenneth D. Schisler.

Schisler is a former Republican delegate who, e-mails show, shared private information and regulatory strategy with a top utility lobbyist, Carville B. Collins. Collins was the lawyer for Ehrlich's transition team.

O'Malley filed a lawsuit after the PSC approved the Ehrlich-negotiated deferral plan. It seeks, among other things, to force the commission to consider the merger at the same time as rate relief, in effect holding the deal hostage to get a better plan for consumers.

He is also pushing for the commission to make public the bonuses Constellation executives will get if the merger goes through. Constellation Chief Executive Officer Mayo A. Shattuck III stands to collect $40 million or more from the deal. This month, a judge allowed the suit to move forward, providing the mayor with a preliminary victory.

"We did what we needed to do, as quickly as we could, to fight for the working people of our state," O'Malley said. "Instead of acting like the Public Service Commission, they are acting like the corporate profit commission."

O'Malley has won over some customers who applaud him for taking on the utility company.

"Not to bad-mouth Ehrlich or the PSC, but it seems like they're more in the pocket of Constellation Energy and BGE," said Martha Robey, a Democrat from Parkville who voted for Ehrlich in 2002. "Martin O'Malley is on the right track, but nobody else ever asked any questions."

Critics say the mayor is grandstanding without providing solutions.

"He's trying to look pro-consumer, but once you get beyond 'I'm going to court' What's the solution?" said Keven Igoe, a Republican political consultant. "I guess from his viewpoint, anything that takes attention away from the crime issue in the city is good."

The third major candidate in the gubernatorial race, Duncan, has also sought to stake out a claim to leadership on the BGE issue. But the Montgomery county executive has not been able to play as direct a role in a problem set primarily in Baltimore and its suburbs. About 12,000 BGE residential customers live in Montgomery County, and the county is a party to the rate proceedings before the PSC, but it has not been nearly as active in them as the city has.

Still, the situation gives Duncan the opportunity to bolster one of his central campaign themes: that O'Malley and Ehrlich are more interested in fighting each other than solving the state's problems.

"It's the two of them looking to pick fights rather than solve a problem. Once again," Duncan said yesterday, saying the General Assembly needs to return to session and address the 1999 law.

andy.green@baltsun.com david.nitkin@baltsun.com

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