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Md.'s PSC: A Political Outcast With an Agenda

No matter what conclusions the PSC reaches, the fate of the commission's members seems to be sealed. Leaders of both the Senate and House want them replaced, and so does O'Malley. The second-ranking person on O'Malley's transition team is Baltimore City Solicitor Ralph Tyler, who represented the city in a lawsuit against the PSC. Legislation to reform and replace the commission seems like a certainty, and O'Malley aides are drawing up a list of potential replacements, according to political consultants and analysts. Neumann says she is drawing up a list of candidates for a new PSC. The candidates include a former Maryland state energy official, an expert on wind power and an expert on energy efficiency.

The members of the Maryland Public Service Commission could be on their way out when a new governor and legislature take office, but meanwhile their calendar is brimming.

Though legislative leaders and Baltimore Mayor Martin O'Malley, Maryland's governor-elect, have vowed to oust the PSC members over sharp increases in electricity rates, the commission this week voted to overhaul the way the state's utilities buy electricity.

And late next week the commission will begin to ponder what the "optimal structure" of the utility industry should be, weighing a variety of steps, including undoing elements of deregulation that have taken effect in recent years and getting local utilities back into the power-generation business.

It's unclear how much impact the PSC opinions will have. O'Malley, a Democrat, cannot simply fire the four PSC members, three of whom were appointed by Gov. Robert L. Ehrlich (R), before their terms end. A court has ruled, however, that he and Maryland lawmakers can adopt legislation to reconstitute the commission.

In the interim, the PSC, while discounted politically, can continue to issue binding orders. On Thursday, it changed the way Maryland... more [truncated due to possible copyright]  

The members of the Maryland Public Service Commission could be on their way out when a new governor and legislature take office, but meanwhile their calendar is brimming.

Though legislative leaders and Baltimore Mayor Martin O'Malley, Maryland's governor-elect, have vowed to oust the PSC members over sharp increases in electricity rates, the commission this week voted to overhaul the way the state's utilities buy electricity.

And late next week the commission will begin to ponder what the "optimal structure" of the utility industry should be, weighing a variety of steps, including undoing elements of deregulation that have taken effect in recent years and getting local utilities back into the power-generation business.

It's unclear how much impact the PSC opinions will have. O'Malley, a Democrat, cannot simply fire the four PSC members, three of whom were appointed by Gov. Robert L. Ehrlich (R), before their terms end. A court has ruled, however, that he and Maryland lawmakers can adopt legislation to reconstitute the commission.

In the interim, the PSC, while discounted politically, can continue to issue binding orders. On Thursday, it changed the way Maryland utilities will buy electricity by ordering them to buy in smaller chunks and space out the purchases to smooth out prices. An earlier plan, part of the deregulation of the utility industry, froze electricity prices for Baltimore Gas & Electric Co. for seven years and established a timetable that bunched all of its new electricity purchases together. When those purchases took place last winter, electricity prices were near all-time highs.

That contributed to a request by BGE, a unit of Constellation Energy Group Inc., for a 72-percent increase in rates this year, a request that shook up state politics and ultimately contributed to the termination of a proposed merger of Constellation and FPL Group Inc. BGE was allowed to enact a 15 percent increase immediately, and the rest is scheduled to go into effect by the end of next year.

"The way deregulation was set up initially was a recipe for disaster," said Johanna Neumann, policy advocate for Maryland Public Interest Research Group. "This decision is one of the small steps that need to be taken over the next several years to fix the utility problem."

The idea of spacing out electricity purchases is in place in other states, such as New Jersey. The Maryland PSC this week ordered utilities to buy electricity at six-month intervals with contracts lasting two years. That means utilities will buy no more than 25 percent of their needs at one time, but rates paid by consumers would be adjusted twice a year.

BGE had wanted to have three-year contracts, spaced out so that it would buy one-third of its supplies at one time on an annual basis.

"We're a little disappointed," said Mark Case, BGE's vice president for regulatory affairs. "Customers like predictability. Too frequent price changes are not a good thing."

The rate dispute has led to a reassessment of deregulatory steps that allowed regulated utilities to sell off power generation plants or allowed parent companies to move power generation into separate subsidiaries. This year, that put the regulated utilities, which now buy power at unregulated prices, in the position of passing along price increases to consumers while separate power generation firms or subsidiaries post big profits.

Neumann complains that energy efficiency issues "fell off the table" with the industry's restructuring.

Case warns against getting utilities back into the power generation business in a search for more stable prices. "It carries the risk of undermining the whole competitive market," he said. "The market is working well overall." He added that prices were lower than they would be otherwise.

The PSC is to write a report to submit to the General Assembly.

No matter what conclusions the PSC reaches, the fate of the commission's members seems to be sealed. Leaders of both the Senate and House want them replaced, and so does O'Malley. The second-ranking person on O'Malley's transition team is Baltimore City Solicitor Ralph Tyler, who represented the city in a lawsuit against the PSC. Legislation to reform and replace the commission seems like a certainty, and O'Malley aides are drawing up a list of potential replacements, according to political consultants and analysts.

Neumann says she is drawing up a list of candidates for a new PSC. The candidates include a former Maryland state energy official, an expert on wind power and an expert on energy efficiency.


Source: http://www.washingtonpost.c...

NOV 11 2006
https://www.windaction.org/posts/5755-md-s-psc-a-political-outcast-with-an-agenda
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