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S.B. 1
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VETOES
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Lack of consumer choice and a forced credit plan fail to afford BGE ratepayers the
same protections I negotiated for PEPCO and Delmarva Power customers who have a
choice on whether to participate on an interest-free basis. Forced interest charges
were a consistent complaint throughout the public hearing. As People's Counsel
Patricia Smith testified, other deferral plans did not include interest payments and
that such provisions are contrary to the interests of consumers. I agree with Ms.
Smith's assessment, and respectfully suggest that you follow this model in crafting a
new, more meaningful rate stabilization plan.
Third, Senate Bill 1 provides $386 million for rate relief. This $386 million was also
included as part of my $600 million rate relief plan, and is no way dependent upon
passage of this bill. Members of the General Assembly and BGE ratepayers have
knowledge of additional concessions to be provided by the electric companies,
particularly if the proposed merger between Constellation Energy Group and Florida
Power & Light occurs. My plan proposed that $600 million be made available if the
merger occurs. Simply put, Senate Bill 1 allows Constellation to pocket nearly $220
million that would have been available to offset interest charges.
Fourth, Senate Bill 1 eliminates the People's Counsel, Patricia Smith. Ms. Smith has
been a public interest attorney for decades. She is a tireless advocate for the State's
consumers. In reviewing the hundreds of comments received by my office, not one
person raised objection to Ms. Smith's efforts on behalf of consumers. There is
absolutely no valid reason to terminate her from her position, when her sole mission
has been to work on behalf of her clients, the State's utility customers. Resorting to
this degree of overreaching only strengthens the public's cynical attitude toward your
handling of this issue over the past several years.
Fifth, Senate Bill 1 seeks to remove all members of the PSC and requires on a
one-time basis that I appoint new members from a list of names provided by the
Speaker of the House and the President of the Senate. As you well know, the PSC
followed the deregulation law enacted by the General Assembly in 1999 and
procedures established by prior PSC members in 2003. The competitive bidding
process transpired in accordance with the law. The PSC was in constant contact with
the General Assembly and the fact that there would be a dramatic increase in rates
was made known to the General Assembly's Leadership on many occasions prior to
the 2006 session. Yet, the General Assembly continues to use the PSC as a scapegoat
for the failure of the 1999 deregulation law. Despite the opinion of the General
Assembly's lawyer to the contrary, this provision is in all likelihood unconstitutional.
Further, it is unsettling to the State's regulatory climate for the General Assembly to
eliminate the members of a quasi-judicial agency with nearly a century of
independence when the General Assembly disagrees with an opinion of the agency.
Such action will only lead to major regulatory uncertainty, less competition, and
higher costs for consumers.
There are other troubling issues raised during the public hearing. Senate Bill 1 allows
BGE to borrow money and charge its customers for the full interest on the loan, but
then in turn allows BGE to lend money to its parent company, Constellation, at below
market rates. Moreover, the bill allows BGE with PSC approval to negotiate directly
with Constellation for energy procurement, rather than using competitive wholesale
procurements. This has the potential for insider dealing and favoritism, and will
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