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Ehrlich takes fight public

THE BALTIMORE SUN

Fuming about an electricity rate relief plan approved this week by the General Assembly, Gov. Robert L. Ehrlich Jr. pledged yesterday a "very public and very transparent" campaign to inform Maryland voters of what he believes are misguided elements of the legislation and hinted broadly that he might veto the measure.

Ehrlich said he will make a final decision after a public hearing that he and Lt. Gov. Michael S. Steele plan to conduct Monday or Tuesday, shortly before a constitutional deadline for acting on the measure.

But the governor's comments yesterday at a news conference and on WBAL-AM suggested that the hearing - which he referred to once as a "veto hearing" - would be more an opportunity for him to influence the public than for the public to influence him.

"Clearly, I don't like what they've done," Ehrlich said on WBAL radio. "It's overreaching just to get by. This is not leadership. It's politics. People deserve better than this."

Ehrlich has used the bully pulpit before to swing people to his side on major issues - most notably, he traveled the state in 2004 to generate support for his medical malpractice reform efforts - but never before has he faced such high stakes.

Just five months before Maryland's first Republican governor in a generation is set to go before the voters again, he is setting out to persuade BGE's more than 1.2 million residential customers to side with him against a rate plan that lawmakers of both parties say provides crucial protections for consumers while preserving the financial integrity of BGE.

The utility company has said that it supports the measure passed by the legislature.

Top Democrats are criticizing the governor for waging a campaign against the legislation after the Assembly passed it, rather than working to improve it during the one-day special session that ended early yesterday.

The governor agreed to the need for a special session and signed an executive order calling lawmakers back to Annapolis to deal with the BGE rate issue. But neither the governor nor his staff took part in negotiations on the final bill to blunt the impact of an average 72 percent increase scheduled for July 1, caused by the expiration of rate caps instituted as part of a deregulation of the utility industry in 1999.

"They have no plan, and what they are trying to do is a big disservice to a confused BGE customer," said Sen. Thomas M. Middleton, a Charles County Democrat who was a key figure in passing the General Assembly's plan. Ehrlich "has to be held accountable for his lack of planning and his bully politics."

The Assembly passed its rate-relief plan with more than enough support to override a veto, which would require 60 percent of the vote in both chambers.

"The bill was passed with overwhelming bipartisan support and enough support to override the governor's veto," said Baltimore Mayor Martin O'Malley, a Democratic candidate for governor who filed a lawsuit that helped lead to the special session. "So, whether he decides to veto it or not or sign it or not is pretty irrelevant."

The legislature's plan, passed in the early morning hours yesterday, trims the BGE rate increase to 15 percent. Rates would hold steady for 11 months, and then consumers could choose either to pay market rates or enroll in a deferral plan for another seven months.

Customers would be charged an average monthly fee of $2.19 for 10 years to repay BGE.

The measure also fires the members of the Ehrlich-controlled state Public Service Commission and replaces them with a group chosen by the governor from lists of names provided by the legislature. The measure changes how Maryland utilities buy electricity and includes provisions to help customers of the state's other power companies.

Ehrlich gave a preview yesterday of the issues he will raise in his "fairly unprecedented" public hearing, which he said could go on for "six, seven, eight, nine, 10 hours."

He heaped criticism on several provisions he said were added to the Assembly bill at the last minute by Democrats, including a number of measures to make it more difficult for Public Service Commission Chairman Kenneth D. Schisler to reinstate a lawsuit to stop the legislature from firing him and the other commissioners.

Lawmakers had passed a bill that would have enabled the firing of Schisler and PSC members earlier in the year, but the governor vetoed it.

Ehrlich said, for example, that it was outrageous that the legislature included a provision requiring that any challenge to the rate plan be filed in Baltimore Circuit Court. When a similar PSC reconstitution bill was under consideration in April, Schisler filed suit in his hometown courthouse in Talbot County.

"To do this really raises unfair questions about that court," Ehrlich said, hinting that Democratic legislators were maligning Baltimore judges by assuming that they would be inclined to rule in the Assembly's favor.

PSC spokeswoman Christine E. Nizer said no decision has been made on whether the PSC will revive its lawsuit. Another element of the new law would prevent Schisler from again using public funds to pay for a lawsuit.

Ehrlich appears ready to focus his offensive on the numbers in the Assembly rate plan. In a news release, Ehrlich said he has "grave reservations about a plan that forces 1 million Marylanders to pay $109 million in interest."

State fiscal analysts estimate that is how much BGE would charge in interest during a 10-year repayment period after it borrowed money to keep operating while electricity rates are kept low. However, the legislature secured more than $386 million in givebacks from the company that are expected to cover all of the interest and much of the principal.

"This plan has interest charges that follow you around for 10 years and no consumer choice. Everybody is forced into the credit card plan," Ehrlich said on WBAL yesterday afternoon. "It's a far worse deal than what was negotiated during the session."

The plan that was negotiated during the spring legislative session, which Ehrlich has referred to as "the best plan" and wanted lawmakers to take up again this week, also offered consumers no choice of whether to participate.

It included interest charges of $132 million spread over 10 years.

The earlier legislative plan included $600 million in givebacks from the company, but all were contingent on the success of the merger between Constellation Energy and Florida-based FPL Group Inc. The $386 million in the current plan is not contingent on the merger, and the measure requires the new PSC to apply any savings from the merger to reducing customer bills.

Ehrlich criticized the legislature's plan yesterday as a "$220 million giveback" to Constellation. He arrived at this figure by subtracting the $386 million guaranteed in this plan from the $600 million that was contingent on the merger in the earlier plan.

Supporters of the measure passed by the Assembly say that it will benefit consumers no matter what happens in the merger and that the plan would probably yield even greater benefits than the old one if the merger goes through.

"As far as the ratepayers go, it's just a win-win," said Del. A. Wade Kach, a Baltimore County Republican, one of 15 members of Ehrlich's party in the House and three in the Senate who voted in favor of the measure.

Ehrlich has cautioned for months that the legislature was apt to destroy BGE and Constellation by preventing them from recovering their costs for electricity, possibly sending them into bankruptcy and leading to rolling blackouts in Maryland.

But yesterday, he suggested that the legislature bought off the utility company with the "$220 million giveback."

"The company made out bigtime in the last 24 hours on the dollars end," Ehrlich said. "Everybody got paid and funded, but you have to worry about the long-term consequences of what you're doing."

Constellation spokesman Robert L. Gould declined to comment on Ehrlich's public hearing or planned communications campaign. He said the company is working out the details of administering the plan.

"We're staying focused on what we have said all along is our top priority, and that's our customers and putting a plan in place for them to manage the rate increase," Gould said.

andy.green@baltsun.com

Sun reporter John Fritze contributed to this article.

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