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Hey, General Assembly of MD: ”Reverse Deregulation!”

by William Hughes Monday, Mar. 27, 2006 at 7:41 PM
liamhughes@comcast.net

Most Marylanders can expect their electric bills to go up by 3 a year-a 74 % increase! In 1999, the legislature deregulated the industry. In a sweetheart deal, BGE was absorbed by Constellation Energy and required to begin buying its electricity on the open market. Meanwhile, BGE’s electric-generating assets, originally paid for by the people, were turned over to Constellation in “a cash-free shuffle.” The ratepayers are now being asked to pay again!

Hey, General Assembl...
state_house.jpg, image/jpeg, 293x412

If I hear one more time that Maryland’s GOP Governor Robert Ehrlich is “pro-business,” I’m going to scream! Didn’t he put his hand on the Bible when he was sworn into office, in Annapolis, and implicitly promise to act as a trustee for the public good, “without partiality or prejudice?” Ehrlich is duty bound in all official matters by virtue of the supreme law of the land, the Constitution, to put the people first, not his fat cat business cronies and contributors. This should mean for him to stand up for the public against any attempt to impose draconian charges on the ratepayers by a soon-to-be unregulated, but very profitable, gas and electric utility, Constellation/BGE. More about that dastardly ploy in a moment.

Let’s explore what those code words, “pro-business” can really mean. At their very worst, they represent the costly legacy of that Mother of all Deregulators, Ronald Reagan, the most over rated-president in American history. (1) Now we know that those buzz words may signify elected officials looking the other way, while the public gets screwed by the greedy Special Interests. It wasn’t any accident that President George W. Bush referred to his deep-pockets’ crony, Ken Lay, the indicted CEO of Enron, as “Kenny Boy.” He even considered that clown for the post of Secretary of Energy in his administration. (2)

Unless checked by vigilant lawmakers, the public and the media, the words, “pro-business,” have often times translated into higher gas and electric rates, more pollution of our water and air, mega-highways through communities, massive fraud, excessive development, higher taxes for the middle class and political corruption. Does the name Jack Abramoff ring a bell? How about Rep. Randy “Duke” Cunningham (R-CA)? They were both “pro-business.” Just look, too, at these headlines from the recent past: ImClone, Enron, Adelphia, Tyco, WR Grace and Worldcom. They are all other examples of corporate schemes that have either polluted the earth and/or ripped off the public, corporate stockholders and/or their own trusting employees.

Now, let’s get back to Ehrlich and to the particulars of the ongoing brouhaha with the Baltimore Gas & Electric Company (BGE); its parent organization, Constellation Energy; and its CEO, Mayo Shattuck III. Most Marylanders can soon expect their electric bills to rise by 3 a year! That’s a whopping 74 percent increase. Why? Because back in 1999, the Legislature voted in a sweetheart deal to deregulate the industry after a five year waiting period. As a result, BGE got out of the electric-generating business. It transferred those valuable assets to its parent company, Constellation Energy, which then required it to purchase its electricity on the open market, including, strangely, buying it from Constellation Energy! Now, in the summer of 2006, BGE will begin sticking it to the consumers. Ehrlich urged the Maryland Legislature not to do anything to hurt BGE/Constellation, which he labels a “very important company.” (3) He’s indicated that the rate increase “won’t stand,” but it’s his political appointees who dominate the Public Service Commission (PSC), which is supposed to have oversight over this matter. It, in turn, has been criticized by lawmakers for having “a pro-business agenda,” too, and not coming up with a “manageable plan to mitigate rate increases.” (3)

Jay Hancock, a gutsy Baltimore Sun columnist, thinks the people should fight back. He set out in a March 8, 2006 article, a number of good reasons why the General Assembly, now in session, should be pushed by the voters to immediately reverse the bogus 1999 deal with BGE since, among other things, it was “deeply flawed” and sold on the false notion that electricity prices would fall from competition. (4) What competition? BGE’s parent company, Constellation Energy, is now looking to merge with a Florida utility, FPL, and make itself into the largest utility in the country. Meanwhile, BGE/Constellation has been raking in “record profits,” and its CEO, Shattuck, took in .9 million alone, in salary, bonuses and stock options in 2004, according to the SEC.

Hancock points out the ratepayers picked up the cost of BGE’s electric “generation plants...which Constellation took over after deregulation in a cash-free shuffle.” In fact, there were 11 power plants, producing nearly 6,000 megawatts of electricity. In addition, the consumers also paid 0 million to Constellation on the “bogus notion” that its Calvert Cliff nuclear generators would “plummet in value after deregulation and that Constellation deserved to to be compensated for the ‘loss.’” Hancock said that Calvert Cliffs today is “worth a mint. There were probably no stranded cost...Meanwhile, BGE/Constellation, how about rebating the 0 million as a step towards easing that rate shock?” (4)

Another sharp critic of this BGE/Constellation’s sock-it-to-the-ratepayers’ affair is Tyson Slocum, Acting Director of “Public Citizen’s Energy Program.” (5) In a letter to the Baltimore Sun, on 03/18/06, he wrote: “While BGE pleads poverty in asking for the rate increase, Constellation is price-gouging Marylanders with power produced by facilities that Maryland used to control. Forcing Constellation Energy to disclose its profit margins on these once-regulated power plants would tell us not only whether the BGE rate increase is justified but also whether Maryland’s deregulation experiment is working to protect consumers.”

Again, I quote Hancock in another piece on the subject. He wrote, “Constellation Energy owns 100 percent of BGE, has 0 million in cash and a BBB bond rating, has pulled millions in ‘stranded cost’ money out of BGE and could put money back to ameliorate rate shock...For some reason BGE’s customers also had to pay out about 0 million to a trust fund in recent years to cover decommission cost for Constellation’s highly profitable Calvert Cliffs nuclear plant, even though the expenses won’t be incurred until 2006. (6)

This brings me again to Governor Ehrlich, an ex-Congressman. He learned his Right Wing politics at the knee of (gasp) Newt Gingrich! (7) Ehrlich is a true believer in Reaganomics. Its half-baked, junk theories have contributed to the nation now drowning in an ocean of debt-.3 trillion-and have also brought our fragile environment, via global warming, to a point of disaster. (8)

Meanwhile, on a positive front, a Committee of the House of Delegates in Maryland has voted to give the General Assembly the power to thwart the .4 billion merger between Constellation and Florida’s FPL Group. This bill, if it does become law, could be used as a powerful leverage by the legislature to give the consumers a “fair shake” in this matter. (3) Keep in mind, however, that the “pro-business” Ehrlich could veto any measure that is passed, if he and his cronies at the utility giant don’t like it.

Beside Ehrlich, there are others, this time in the General Assembly itself, who should be very worried about how all of this deregulation/electric hike business plays out before the general election set for Nov., 2006. I’m talking specifically about the members of the Legislature who voted, in 1999, for deregulation. From Baltimore City, that list includes: “Sandy” Rosenberg, “Maggie” McIntosh, and seven others, according to a report by the Baltimore Sun’s Dan Rodricks. These lawmakers better make sure that “the deal,” if any, that comes out of this year’s legislature meets with the approval of the voters, otherwise, they may be soon known as - “ex-members of the General Assembly!”

Many Marylanders are fighting mad about the totally unjustified utility bill increases which are coming their way. I also think that all of the serial lies coming out of Washington with respect to the Iraqi War are starting to have an effect on them. (9) A local ad hoc group, the “Maryland Coalition to Stop the Rate Hike,” has begun a Petition drive demanding that there be “no merger,” that the 8 million (so-called “stranded cost”) be returned to the ratepayers by Constellation/BGE, and that the people should consider, if necessary, exercising their ancient right of Eminent Domain to take over BGE. The protest action, which was originated by the “All Peoples Congress,” will also picket the home of CEO Shattuck, on Wed. March 29, 2006. (10)

At the end of the day, I believe the General Assembly will need to be called into a “Special Session” to pass a law reversing deregulation. It should also then establish a Committee to renegotiate the 1999 settlement that BGE, and its parent company, Constellation Energy, reached with Maryland regulators. The time for the people of Maryland to reclaim their power is now!




Notes:

1. http://www.spartacus.schoolnet.co.uk/USAreagan.htm

2. http://www.thesmokinggun.com/archive/bushlay1.html

3. “Energy Merger Might be Leverage,” Kelly Brewington, 03/24/06, Baltimore Sun.

4. Jay Hancock, Baltimore Sun, “MD. Letting BGE Zap Customers,” 03/08/06.

5. http://www.citizen.org/about/

6. Jay Hancock, Baltimore Sun, “Look Past BGE - to its Parent,” 03/22/06. The amount the utility actually owes the ratepayers, Hancock insisted, is closer to “8 million.”

7. http://rightweb.irc-online.org/profile/1203

8. Time Magazine, 04/03/06, “Global Warming: Be Worried, Very Worried,” Jeffrey Kluger.

9. http://www.afterdowningstreet.org/

10. Activists from the “Maryland Coalition to Stop the Rate Hike” will gather for the picket at the corner of N. Charles St. & Coldspring Ave., near Loyola College, at 6 PM, on March 29, 2006.

© William Hughes 2006.

William Hughes is the author of “Saying ‘’No’ to the War Party” (IUniverse, Inc.). He can be reached at liamhughes@comcast.net.

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