Government officials and Baltimore Gas and Electric did a poor job of preparing customers for a planned 72 percent rate increase, but that misstep should not prevent a planned merger between BGE parent Constellation Energy and FPL Group from going forward.
Those were among the findings released Monday by Sage Policy Group, a Baltimore-based economic and policy research firm.
Sage said that, thanks to rate caps, BGE customers have been spoiled by cheap electric rates. And even with the pending increase, customers would see their electric bills falling in line with utility rates non-BGE customers pay in neighboring communities.
BGE is set to implement a rate increase next month, with the current plan calling for a 21 percent initial increase to start July 1 and future increases to reach the 72 percent mark.
The rate increase has been mired in lawsuits, political maneuvering and finger-pointing over its fairness and how it should take effect.
“After the 72 percent rate increase, the typical BGE electric bill will rise to $115” per month, said Anirban Basu, CEO of Sage.
“Other Marylanders are typically paying around $105 to $124 monthly for electricity,” Basu said.
But BGE spokesman Robert Gould said the typical BGE electric bill after July 1 will be about $150 a month.
Basu added that if the Maryland Public Service Commission had not imposed caps on electricity rates in 1999 and BGE rates coincided with “overall consumer energy prices,” the July 1 rate increase would be even higher.
Commission personnel said they have had 23 briefings in the past year with public officials to discuss the pending July 1 increase.
“The commission has had a public education campaign since deregulation in 1999,” said Christine Nizer, manager of external affairs for PSC.
“Unfortunately, with the rate cap in place, there wasn?t much interest in the issues.”
In his report, Basu said the planned merger between Constellation and Florida-based FPL Group would benefit consumers because the merger “has the potential to unleash significant scale economies from which central Marylanders have yet to benefit.”
