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The Tentacle


June 14, 2007

Time to Re-regulate the Deregulated

George Wenschhof

One of the critical issues that Gov. Martin O'Malley focused on in his campaign was the rising cost of electricity. His speeches would include phrases inferring the Public Service Commission (PSC) should focus more on the needs of the working men and women of Maryland and not the energy companies and their executives.

After being sworn in, the governor moved quickly in this area signaling through Ralph Tyler, his chief legal counsel, that they would be looking to replace the current chair of the PSC, Kenneth Schisler, who Mr. Tyler stated he hoped would resign. Senate President Thomas V. "Mike" Miller even entered the negotiations by suggesting a financial termination package to assist Mr. Schisler with his legal bills.

Mr. Schisler, a pro-energy industry advocate, who was appointed by Gov. Robert L. Ehrlich, Jr., had survived a 2006 attempt by the General Assembly to fire the entire PSC. He won that battle in the courts when it was ruled the General Assembly action was unconstitutional. Yet on January 29, 2007 with little fanfare, Chairman Schisler submitted his resignation.

Within two weeks of the resignation, Governor O'Malley nominated his replacement, Steven Larsen, and tapped Susanne Brogan to fill an open slot. He also reappointed Harold Williams. On March 15th the governor also nominated Judge Lawrence Brenner to fill an open position. Less than three months after being sworn in, Governor O'Malley himself, on March 27, swore in these four of the five members of the Public Service Commission.

In a press release issued that same day, the governor stated: "Today, we are taking another step forward in making our government work again for the people of Maryland."

Sadly, less than three months later, the PSC approved a 50% rate increase for BGE customers. The governor, wanting to make sure Marylanders saw his concern, then announced a $5 million increase for a total of $57 million in funding to the Electric Universal Service Program (EUSP) that provides energy assistance to working families of Maryland.

This 50% increase along with the 15% increase last year mirrors the proposed 72% increase of last year which caused the entire furor in the first place. I remember chastising State Senator Alex Mooney last year for his non-vote on the rate hike and I asked for deregulation to be closely examined in a rational, non-partisan fashion.

Deregulation of electricity was passed in Maryland in 1999 with bi-partisan support that was supported by all eight state representatives from Frederick County. The vote in the House of Delegates was 99-36 and the Senate was 37-9 in favor.

This change was heralded by many as a way to keep costs down for consumers and the utility companies spent millions to successfully sell this idea to the public and to politicians. Deregulation of electricity had become the "new wave" political thought; and other states were also moving forward with this concept.

California was one of the first states to deregulate electricity and their rolling black-outs of 2001 had not yet occurred; and Enron, a mega energy company, had not yet collapsed when this legislation passed in Maryland.

On June 2, 2006, the Baltimore Sun reported that the proposed merger of Constellation Energy Group, Inc., who supplies electricity to BGE customers, and FPL Group, Inc., a Florida-based utility, would result in Constellation Energy executives receiving $72.9 million in extra compensation.

Here again is another example of when representative government may need to step into the free-market economic driven system that works so well for Americans. Enormous profits paid to executives by the working men and women of Maryland for a utility they must have to exist is simply not right.

This should not be a Republican or Democrat issue, for electricity at an affordable rate is a need of all residents of Maryland.

On June 5, Governor O'Malley appointed Malcolm D. Woolf as the director of the Maryland Energy Administration. He has indicated that he wants to look at not only how power is being generated but also how it is being consumed.

Mr. Woolf comes well recommended and - hopefully - his experience will result in state-wide energy policies that benefit the residents of Maryland.

One of the first items on his agenda should be working with the Public Service Commission to examine the feasibility of re-regulating the electric industry as soon as possible.

Marylanders, along with all Americans, deserve reasonable and fair rates for electricity.



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