Energy markets controls wanted

The Baltimore Sun

State lawmakers, joined by advocates for seniors and consumers, called yesterday for full-scale re-regulation of Maryland's energy markets, hoping to capitalize on outrage over high winter electric bills and another possible rate increase.

The proposal sets the stage for debate in the General Assembly this year over efforts to reverse what many regard as the state's failed move to deregulate markets in 1999.

Legislative leaders concede that some form of re-regulation is likely, but are lining up behind a more moderate approach.

The issue took on added urgency this week after Constellation Energy Group announced that its utility, Baltimore Gas and Electric Co., would seek an unspecified increase in rates for delivering electricity and natural gas next year.

Constellation Energy has frequently come under harsh criticism in the legislature over skyrocketing electricity bills.

"Deregulation is not working," said Del. Michael D. Smigiel Sr., a Cecil County Republican. "Costs continue to go up, and there seems to be no end in sight."

Any effort to re-regulate markets would draw strong opposition from Constellation. Spokesman Rob Gould said the company would caution lawmakers against a new regulatory regime that might not be in the best interest of ratepayers.

"The bottom line is [that] it's not going to change the cost of electricity, which is driven by global cost of commodities used to make electricity," he said.

Constellation has not said how much of a rate increase it is seeking, but any increase to the electricity delivery charge is capped at 5 percent under a deal with state regulators. It would be the first delivery rate increase for electricity since 1993 and for natural gas since 2005, according to the company.

The company has indicated since October 2007 that it intends to seek an increase for delivery charges, Gould noted. "In order to continue to invest in the physical plant, we need to pursue this," he said.

But the potential rate rise has incensed some lawmakers and advocates. Many gathered to announce their support yesterday for legislation to require that new power generation be regulated and offered to Maryland residents first, and to lay out a framework for putting existing power plants under regulation.

Backers of such legislation include a bipartisan group of lawmakers and groups such as AARP, which represents older residents on fixed incomes having trouble paying their bills.

The Public Service Commission, the state's chief energy regulator, recently concluded that seizing utility assets for re-regulation would be too costly.

But the lawmakers pointed to an analysis from the Maryland Tax Education Foundation that concluded BGE could buy back power plants from its parent Constellation at a fair price and still cut rates by 10 percent while earning a profit.

Another proposal from Sen. Thomas M. Middleton, chairman of the powerful Finance Committee, would take a smaller step, requiring only new generation - such as the construction of a proposed third nuclear reactor at Calvert Cliffs - to be regulated unless the commission determines that such a step would hurt ratepayers.

Senate President Thomas V. Mike Miller said that approach was more realistic.

"There will be some re-regulation," Miller said. "We're going to try to do what's best for citizens."

Baltimore Sun reporter Hanah Cho contributed to this article.

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