Jun 3 - Knight Ridder/Tribune Business News - Andrew A. Green The Baltimore Sun

Frustrated by what they interpreted as defiance, the leaders of the General Assembly gave members of the Public Service Commission an ultimatum yesterday: Act quickly in the interests of consumers or be fired.

The threat came in a joint statement from Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch, Democrats who were angry at yesterday's response by the PSC to a judge's order that it hold new hearings to reconsider a BGE rate relief plan.

The PSC said in a ruling that it could not extend caps on electric rates, which are scheduled to rise 72 percent in July. The agency also said it would reinstate an increase-deferral plan that charges interest to customers.

"Today's action further erodes the public's confidence in the PSC," Miller and Busch wrote in a letter that inched the legislature ever closer to a special session on electricity rate issues. "The court ordered the commission to re-examine its earlier decision and to stand up for the citizen rate payer. Once again, they failed.

"If they intend to have hearings toward improving the [rate increase deferral] plan, it's incumbent upon them to act immediately. Otherwise, it's time for the members of this Public Service Commission to be replaced," Miller and Busch added.

The widespread pressure from legislators on Assembly leaders to call a special session increased this week when Baltimore City won a lawsuit to force new hearings on a rate-increase deferral plan approved by the PSC in April.

Lawmakers are talking about reviving a bill adopted by the legislature but vetoed by Gov. Robert L. Ehrlich Jr., a Republican, to reconstitute the PSC. Four of five PSC members have been appointed by Ehrlich and have been accused of pursuing policies that are friendly to the industries they regulate. The governor has acknowledged that he has named business-friendly appointees to many agencies, including the PSC.

Miller and Busch held back this week on special session plans, waiting to see how the PSC would respond to Baltimore Circuit Judge Albert J. Matricciani Jr.'s order Tuesday. Matricciani told the commission to hold a new hearing on the rate plan that would allow cross-examination of witnesses and consideration of issues to show whether so large a rate increase is justified.

He also said the commission should either extend rate caps that have been in place for six years until a new plan can be crafted, or implement a plan the commission approved in March and order reimbursement for consumers later if a better plan is approved.

The commission chose the March plan and included in its order a lengthy analysis of why it believes Matricciani's suggestion to extend rate caps is unconstitutional.

One commissioner, Harold Williams, the lone appointee of Gov. Parris N. Glendening who is still on the board, dissented. "The PSC failed the consumers of Maryland," he said.

The March plan holds the initial rate increase to 21 percent on July 1, with more increases to bring customers up to market rates over the next eight months. Consumers would have to pay 5 percent interest on the deferred payments.

The General Assembly failed in the final minutes of the legislative session to pass a more generous rate-relief plan, and Ehrlich spent the next several weeks negotiating with BGE parent company Constellation Energy on a new deal.

Ehrlich's plan would have allowed an initial rate increase of 19.4 percent and would have charged customers interest. The PSC approved it in April but with the condition that BGE not be allowed to collect interest, at least in the near term. That plan, which was criticized by consumers and many Democrats, was the subject of the city's lawsuit.

"It is unfortunate that a result of the litigation will be the implementation of a plan, at least temporarily, that is not as beneficial to BGE customers as the plan contained in the commission's April 28 order," the commission wrote yesterday.

In a statement, Ehrlich backed up the PSC and said the reinstatement of the March plan was the inevitable result of the city's court case.

"Thanks to the Baltimore City administration, more than 1 million Marylanders have been saddled with a flawed plan that costs working families more money while requiring no concessions whatsoever from energy companies," Ehrlich said.

In a statement, Mayor Martin O'Malley, a Democrat who is running for governor, said the PSC's actions demonstrate that it is incapable of providing appropriate relief for ratepayers.

"By now, it should come as no surprise to anyone," O'Malley said, "that when given a choice between protecting consumers or big corporations, Bob Ehrlich's Public Service Commission is going to pick powerful corporate interests every time. We need a new Public Service Commission now."

Scott Arceneaux, campaign manager for Montgomery County Executive Douglas M. Duncan, a Democrat who is running for governor, said the PSC's continued failure to protect the public is further proof of the need for a special session.

"It should be abundantly clear at this point that the PSC, which is bought and paid for by the energy industry, will never do the right thing," Arceneaux said in a statement.

Del. Ann Marie Doory, a Baltimore Democrat and vice chairman of a committee that handles utility issues, said her colleagues and constituents were already eager for a special session to replace the PSC and take further action to help consumers. She said yesterday's PSC order only added to the impetus.

"This is like a slap in the face," she said.