Gov. Robert L. Ehrlich Jr. announced yesterday that he will call a special session of the General Assembly to develop an electricity rate deferral plan because the alternative the Public Service Commission adopted last week is unacceptable.
The governor's announcement came hours after the Assembly's Democratic leaders began informing lawmakers that they had agreed to convene a special session next week. Such sessions can be called by the governor or by a majority of the legislature.
Senate President Thomas V. Mike Miller said the PSC's response last week to a legal victory by the city of Baltimore - reinstating an earlier rate deferral plan that charged consumers 5 percent interest - was the last straw for the legislature. The governor's announcement, Miller said, was an attempt to avoid being left behind.
"It came about because the speaker and myself agreed to a special session next week," Miller said.
In a letter to Miller and House Speaker Michael E. Busch, Ehrlich blamed Mayor Martin O'Malley for making a special session necessary, saying O'Malley harmed consumers with his lawsuit to throw out a plan the governor negotiated with utility company officials. O'Malley is seeking the Democratic nomination for governor and has seized on the rate issue as a theme in his quest to defeat Ehrlich, a Republican.
"Due to Baltimore City's interference, more than one million Marylanders were saddled last week with an electric rate stabilization plan that includes far less assistance than the plan negotiated with Baltimore Gas and Electric and Constellation Energy in April and includes no concessions whatsoever from energy companies for working families," Ehrlich wrote.
Ehrlich asked lawmakers to revive a plan that failed in the final minutes of the General Assembly session, but he said he would welcome "any specific and credible plans, if you have any, that would further benefit customers in addition to the plan we negotiated in session."
That plan included no interest charges and brought consumers up to market rates over 18 months. The plan the PSC approved last week establishes market-rate pricing in nine months.
Miller said the governor's suggestion for how to help consumers is "totally unacceptable."
"It doesn't provide enough in terms of rate relief, and it doesn't abolish the Public Service Commission," Miller said. "This Public Service Commission has got to go."
Busch said he and Miller have discussed limiting initial rate increases to 15 percent, reconstituting the PSC, allowing municipalities to buy power in bulk and resell it to consumers, and requiring Constellation to sell power to BGE at lower rates.
"I think everybody believes we can fashion a better solution than the one we have out there now," Busch said.
Miller said he and Busch agreed yesterday to call a special session next week. He said they planned to announce it at today's meeting of legislative leaders.
Yesterday's letter was not a formal proclamation of a special session, which the governor can call unilaterally. Ehrlich spokesman Henry Fawell said that such a move would require setting a date for a session, but a timetable has not been developed.
BGE electric rates are set to go up 72 percent July 1, with the expiration of rate caps instituted as part of Maryland's 1999 deregulation of the industry.
Yesterday's announcement capped a day of maneuvering over what has become the biggest issue in the state months before a gubernatorial election.
Ehrlich aimed directly at O'Malley yesterday, accusing him of "a negligent decision" in filing the lawsuit.
"What were they thinking?" Ehrlich said in an interview. "What's he accomplished, higher rates?"
O'Malley responded with a statement saying that it was the governor's PSC that approved the 72 percent rate increase and that the city took the panel to court to get a better deal. The judge ruled in the city's favor.
"Our goal is to reduce the 72 percent rate hike - and remove the Ehrlich Public Service Commission," O'Malley said in the statement. "We will continue [the] fight for the interests of working families - not those of powerful corporations."
O'Malley hit on the same themes in a campaign commercial that began airing yesterday, his first of the gubernatorial race. It boasts of his administration's accomplishments in forcing a new hearing by the PSC on the rate increase deferral Ehrlich negotiated.
Montgomery County Executive Douglas M. Duncan, who is also seeking the Democratic nomination for governor, said in a statement that he was "glad that the governor finally recognizes there is an energy crisis in the state of Maryland." Duncan has been calling for a special session for weeks.
"While it appears that the governor wants to fight with the mayor, and the mayor wants to fight with the governor, it's time that the debate really be about what's best for Maryland's residents," Duncan said in the statement.
The city also filed a motion yesterday in circuit court, saying PSC members failed to duly consider the options Judge Albert J. Matricciani Jr. presented to them in his decision last week.
Matricciani said the PSC had to hold a hearing on Ehrlich's rate deferral plan but must allow cross-examinations and broader testimony to determine whether such a large increase is warranted. In the meantime, he said, the PSC could briefly extend the rate caps or reinstate its original deferral plan but make up the difference with credits on consumers' bills if it adopts a better proposal.
The PSC issued a decision Friday, saying it would adopt the original plan because extending the caps would be illegal. City Solicitor Ralph Tyler said yesterday that the PSC decided without adequate fact finding.
The Office of the People's Counsel, an independent state agency that advocates for utility customers, filed an objection yesterday to the PSC's decision. People's Counsel Patricia A. Smith, whom Ehrlich appointed, has long opposed rate deferral plans that charge customers interest and automatically enroll customers unless they opt out.
"I strongly opposed the imposition of any interest and also wanted for consumers to have to choose it," Smith said.
Smith asked Matricciani to clarify his May 30 order giving the PSC the option of extending the rate caps past July 1. The judge did not note any legal authority permitting such a move, and the PSC and the People's Counsel have questioned whether such authority exists.
The state attorney general's office has said it believes it would be legal for the state to extend the rate caps temporarily.
At a luncheon last week for reporters and editors, Constellation CEO Mayo A. Shattuck III said he would not object to a special session if the legislature developed a reasonable plan before returning to Annapolis.
During the legislative session this spring, Constellation officials said the company would not accept any plan that involved firing the members of the PSC, but last week Shattuck took a softer stance on the issue.
"If that happens, we'll deal with it, but we don't want that over and over again," Shattuck said.
Del. Curtis S. Anderson, a Baltimore Democrat who has been leading the effort to call a special session through a petition of legislators, said that the goal remains getting a better deal for ratepayers but that lawmakers must remove the PSC.
"I think if the only thing we do is get rid of the PSC, we'll have had a successful session," he said.
Sun reporters Paul Adams and John Fritze contributed to this article.
The governor can call a special session at his choosing, or the General Assembly can require the governor to convene one when a majority of lawmakers sign a petition.
Such sessions are usually short, with lawmakers gathering to address a pressing matter after they have already agreed on the framework for a solution. No date has been set yet for the electricity rate session.
The most recent special session was in December 2004, when Gov. Robert L. Ehrlich Jr. called lawmakers to address medical malpractice issues. In 1991, lawmakers held a special session to draw congressional district maps.