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Power politics


It doesn't take a clairvoyant to have anticipated Gov. Robert L. Ehrlich Jr.'s distaste for the Baltimore Gas and Electric rate relief plan. In Tuesday's six-hour infomercial live from the State House (it may have been staged, but that was no Masterpiece Theatre, Maryland Public Television), the outcome appeared as predetermined as the witness list. If there was one new iota of fact to be gleaned from the event, it eluded us. Misinformation, on the other hand, was in plentiful supply.

Even the so-called experts on parade failed to satisfactorily explain what the bill does. But setting aside the day's absurdities (such as barring the first proponent from speaking until the 2-hour-50-minute mark), at least two patently false claims need to be corrected for the record.

The first is that the bill will leave consumers paying off a huge debt for BGE. Not true. The measure defers much of BGE's 72 percent rate increase (the amount above and beyond a permitted 15 percent rate increase) by allowing the company to issue bonds. And yes, those bonds require interest payments, but ratepayers don't get stuck with that cost. Why? Because the measure requires BGE to rebate certain fees that more than cover the interest charge (and much of the principal).

As a result, the average customer will pay $2.19 a month for 10 years to get the equivalent of $5.02 a month in benefit. It's like paying off a $600 loan with a total of $300 in repayments. And unlike some previous proposals, this benefit is not tied to the utility's merging with anybody.

The second bit of misinformation is that the bill ought to give ratepayers the opportunity to opt out. On the face of it, this seems like an odd criticism because deferring the increase is in every consumer's interests. But let's say you abhor debt of any kind. Why not let you opt out?

The reason is that ratepayers get the maximum benefit when BGE's cost of borrowing is kept as low as possible. Spreading the obligation, as well as the benefit, as widely as possible allows the utility to issue low-interest bonds and not just float a more expensive short-term loan.

Make no mistake, the rate relief bill that was approved by a bipartisan majority of the legislature and now sits on Mr. Ehrlich's desk won't keep deregulated electricity prices from rising further in the future, but it does soften the blow. Independent analyses show it's got the biggest benefit to consumers of all the plans that have been offered. We can't pretend the matter is resolved - a veto by Mr. Ehrlich would doubtless be overridden by the General Assembly, and perhaps then the law will face a court challenge - but people deserve to know the facts, no matter how shockingly they differ from the disinformation generated in Annapolis.

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