Politicians have once again made life more complicated ? and possibly more expensive.
Baltimore Gas & Electric Co. customers were supposed to be able to opt into a plan that would phase in a 72 percent electricity rate hike over 18 months starting Monday. To start that is already confusing.
The reason the opt-in plan even existed is because the General Assembly in 1999 voted for a phony deregulation bill that capped electricity rates at 6.5 percent below 1993 levels for six years. Thus the huge increase when the caps expired.
But a ruling by Circuit Judge Albert Matricciani on Wednesday prevents BGE from offering the plan, at least temporarily. Rates are scheduled to go up July 1.
Instead, consumers must wait until the court reviews the former rate plan. That is scheduled for May 30. The city wants the Public Service Commission to revise the adopted rate plan, crafted by Gov. Robert Ehrlich, to one that offers consumers lower rates.
The opt-in plan would raise rates 19 percent July 1 instead of 72 percent. Market pricing would start in January 2008. Customers who chose the plan would have to pay interest on the deferred costs.
The city?s attempt to find a cheaper alternative may sound good on the surface, but there is no guarantee that consumers will get a better deal. For starters, BGE may not be willing to negotiate.
Even if the company does, there is no way of knowing whether a new plan could be crafted before the July 1 deadline. That could leave everyone ? including the poor ? stuck with a 72 percent rate hike.
The delay also means that companies that want to move into the market can?t because they don?t know what rates to compete against.
Ultimately, consumers will benefit most through competition. Businesses have not been able to compete up until this point because the rate caps forced the price electricity below what it costs to generate and transmit it.
Any new plan must allow competitors to move into the market as soon as possible. Dragging out lower prices just means higher interest payments for consumers on deferred costs that BGE incurs for keeping prices below market.
If nothing else, the state legislature?s and Mayor Martin O?Malley?s actions can serve as a model for how not to manage utilities ? and save money for citizens in other states.
