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March 3, 2009

O'Malley tries again on electric rates

If you're drawing up a list of Gov. Martin O'Malley's vulnerabilities, electric rates have got to be right at the top. Yes, he did secure credits on BGE bills last year and some other concessions from the company, but did he roll back the 72 percent rate increase he bludgeoned Bob Ehrlich with in the 2002 campaign? Not so much.

So he came back to the issue yesterday with a partial re-regulation plan that would allow the state to regulate future power plants, essentially giving the Public Service Commission the power to decide where and when new plants would be built. It is, O'Malley concedes, not "a quick fix by any means." That's for sure. Best case scenario, it would take years to increase the state's generation capacity enough to tip the supply-demand scales, and even then, we the ratepayers would have to foot the bill for the new plants.

That said, there are clearly problems with the way things are going now. Maryland is a major importer of power, and our ability to get more supply from other states is severely hindered by bottlenecks in the electric grid. And under the current system, the company that's most likely to build new plants in the state (Constellation) is also the one that's making big profits from selling power to us via its subsidiary, BGE. What's their incentive?

(Constellation, incidentally, is open to O'Malley's idea, which is, in some people's minds, prima facie evidence that it's bad. A big factor here is that Constellation's proposed third reactor at the Calvert Cliffs nuclear plant would be exempt.)

The problem O'Malley has is that it's not so easy to roll back electric rates in the short term, and it's in the short term that he's being judged. The governor pointed out yesterday that his budget includes a record $90 million in energy assistance for low-income Marylanders, but they're not the ones he has to worry about in the 2010 election. It's the thousands of people who get sticker shock when they open their BGE bills but don't qualify for (or wouldn't even think of applying for) the aid.

How potent is this issue? On a day when the wind chill is 5 below, The Sun's editorial page printed an unscientific poll asking whether people believe BGE's explanation that their high utility bills this winter are mainly due to cold weather. Nine percent of people believe that, and 89 percent don't. That doesn't strike me as indicating a populace interested in considering a nuanced, long-term plan to rejigger the electric markets.

Posted by Andy Green at 7:27 AM | | Comments (6)


Just what we need. The PSC dictating to a company how to run their business. THE SAME PSC who could not give the boy gov his rate decrease that was the basis of his candidacy for gov.

Grab your ankles people, this corrupt inept group is going to scr** us again.
When will the people of this state learn?

Looks like your hero MOM is trying to cover his arse for the upcoming election due to his failed rhetoric
from his election against Ehrlich.
After all BGE promises were made and BGE promises were not kept!

Should I get you a tisue Andy?

Despite being warned that the deregulation passed in 1999 would lead to exactly the situation we have today, those legislators and a governor still were taken in by the promises of Constellation, Enron and the like. Looks like a group of legislators and a different governor 10 years later will still be taken in by Constellation. When will they ever learn?
It's a mess and it will pretty much stay a mess, I guess.

And how is Boy Wonder's plan going to have any effect on utility rates in the next decade? State legislators in 1999 were too shortsighted to realize a good deal when they had it. Low cost base energy from Calvert Cliffs and Brandon Shores should have remained regulated for the good of BGE customers. De-regulation was never about residential customers anyway. It was forced by the larger commerical and industrial customers who were tired of subsidizing residential rates.

If Constellation is reaping huge profits from gouging BGE electric customers, I'd like to know where they are hiding the loot. Profits are way down and the stock has lost 80% of its value in the last 12 months.

There are no easy answers to this problem - just politically expedient ones that have no basis in the reality of basic economics.

Can you tell me who said this?

"You know, when I was asked earlier about the issue of coal, uh, you know — Under my plan of a cap and trade system, electricity rates would necessarily skyrocket."

Listen to the past to see the future of the great oracle who mouthed these words.

Andy, in your blog post you wrote: "And under the current system, the company that's most likely to build new plants in the state (Constellation) is also the one that's making big profits from selling power to us via its subsidiary, BGE."

This sentence reflects a lack of understanding of how power is procured under the standard offer service.

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About the bloggers
Annie Linskey covers state politics and government for The Baltimore Sun. Previously, as a City Hall reporter, she wrote about the corruption trial of Mayor Sheila Dixon and kept a close eye on city spending. Originally from Connecticut, Annie has also lived in Phnom Penh, Cambodia, where she reported on war crimes tribunals and landmines. She lives in Canton.

John Fritze has covered politics and government at the local, state and federal levels for more than a decade and is now The Baltimore Sun’s Washington correspondent. He previously wrote about Congress for USA TODAY, where he led coverage of the health care overhaul debate and the 2010 election. A native of Albany, N.Y., he currently lives in Montgomery County.

Julie Scharper covers City Hall and Baltimore politics. A native of Baltimore County, she graduated from The Johns Hopkins University in 2001 and spent two years teaching in Honduras before joining The Baltimore Sun. She has followed the Amish community of Nickel Mines, Pa., in the year after a schoolhouse massacre, reported on courts and crime in Anne Arundel County, and chronicled the unique personalities and places of Baltimore City and its surrounding counties.
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