72% Increase Seen in Electric Rates

Source: WBAL Radio and The Associated Press

BGE residential electric rates will increase an average of 72 percent, or $743 a year, when a cap on rates is lifted in July, state regulators said Tuesday.

Rates for two other Maryland electric utilities, Pepco and Delmarva Power and Light, have not been capped since July, 2004, but their rates also are expected to rise substantially, the Maryland Public Service Commission announced.

Pepco residential customers will see a typical bill increase about 39 percent, or $468 a year, beginning July 1. The typical Delmarva Power residential electric bill, meanwhile, is expected to increase about 35 percent or $464 annually.

PSC Chairman Kenneth D. Schisler said high fuel prices resulting from last year’s Gulf Coast hurricanes, terrorist threats and the global energy market have pushed up electric rates.

BGE spokesman Rob Gould said the rates “reflect a fair and open process that was overseen by an independent third party.”

The commission issued an order Monday allowing BGE customers to spread the electricity rate increases over two years. However, customers will have to pay BGE 5 percent a year on the amount deferred. And the plan, which the state Public Service Commission implemented against the recommendations of its staff, automatically enrolls customers unless they ask to be excluded.

Similar plans for Pepco and Delmarva Power are being considered the PSC said.

The increase is expected as a result of electricity deregulation, approved seven years ago with the hope of spurring competition for electricity generation. The 1999 law capped residential rates for six years, expiring in July.

Under the Public Service Commission order, residential customers will see their bills climb by 21 percent in July.

“The bottom line is that if you stay in the plan offered by the (PSC), you’re going to see somewhat lower bills at first, and then the money you save will have to be repaid plus interest,” said William F. Fields, an attorney representing the People’s Counsel.

The People’s Counsel favored a phase-in of higher rates without interest payments.

BGE also criticized the decision, saying the delay in rate increases punishes it for having provided power at below-market rates for six years.

BGE said it could be forced to borrow as much as $248 million if all customers participate in the program. The added debt could hurt the company’s credit rating and lead to higher borrowing costs that would ultimately be passed on to customers, utility officials said.