Md.: O'Malley focused on energy costs

Md.: O'Malley focused on energy costs

	Published : Fri, 29 Jun 2007 21:13 By : Agencies Print this Story

ANNAPOLIS, Md. (AP) - Gov. Martin O'Malley pledged Friday to keep looking for ways to address rising energy costs, saying state officials will explore how prices are influenced by the relationship between Baltimore Gas and Electric Co. and its parent company, Constellation Energy Group Inc.

'I intend to do everything I possibly can to get us out of the horrible situation that all consumers, and especially working-people and people on fixed incomes, have been left with in the wake of deregulation,' O'Malley said on WTOP radio.

O'Malley, who discussed failed efforts to reduce a 70 percent BGE rate hike that fully went into effect this month, also said Maryland may need to revisit its 1999 deregulation law.

'It's a complicated problem. I could not fix it in four months,' O'Malley said. 'I would have hoped that we would have been able to at least whittle down that 70 percent, but we were not successful in doing this.'

The governor spoke in response to a man who called into the station, identified himself as a single father and wanted answers for why O'Malley failed to do anything about the rate hike. O'Malley, a Democrat, campaigned heavily on the issue last year in the race against Republican Gov. Robert Ehrlich.

O'Malley explained that Maryland's Public Service Commission couldn't do anything to stop the rate increase after conducting a review of possible alternatives. The commission's five members felt constrained by a law from last year's special session that enabled the utility to recover the full amount of energy contracts it had entered into, he said.

The governor then spoke about the effects of deregulation in Maryland. While lawmakers thought deregulation would increase competition and lower prices, it hasn't. Now, energy is sold at market rates in a larger pool, a grid shared by other states where electricity rates were higher than in Maryland. As a result, Maryland rates 'came up to the higher water level that shared in that pool,' O'Malley said.

O'Malley said the PSC must now examine the relationship between the company that owns the energy, Constellation, and the company that delivers it, BGE.

The governor said it's not right for Baltimore-based Constellation to pull in record profits while consumers 'take it on the chin.'

'You are right to think that it's not fair and it's not right,' O'Malley told the frustrated caller. 'It might be legal. We might not have been able to undo it, but it's not fair and it's not right.'

Rob Gould, a spokesman for Constellation, said the profits O'Malley spoke of are not coming from BGE, but from business conducted 'well outside of Maryland.' Gould also said the company is committed to taking part in future discussions with the PSC.

'We are very committed to the competitive market model and we are certainly going to be a participant in the dialogue as all of these issues are viewed,' Gould said.

What's needed, O'Malley said, is to find a way to use market forces to create incentives for conservation.

Gould said Constellation was 'in total concurrence' with pursuing conservation initiatives. He said BGE has proposed several ideas, such as smart metering, to gauge usage better and help conserve.

In late May, the PSC very reluctantly approved BGE's rate stabilization proposal, giving consumers the option to choose a phase-in of the increase. Customers have until Saturday to elect to defer a portion of the increase until January, when market rates will kick in.

Only 42,240 people out of BGE's 1.1 million customers had signed up for the deferral as of Thursday, Gould said.

The rate increases are the result of deregulation in 1999 that led to price caps. Last July, the rate caps expired. When a proposed 72 percent rate increase was looming, lawmakers ended up in a special session to ease the increase. The so-called 'stabilization plan' kicked in last summer and lawmakers ordered the PSC to plan out a way to move customers to full market rates in January.