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PSC Chairman Offers to Brief Lawmakers on Electricity Bidding Process

Posted on: Tuesday, 30 May 2006, 21:00 CDT

By Andrew A. Green, The Baltimore Sun

May 24--Public Service Commission Chairman Kenneth D. Schisler offered yesterday to provide a confidential briefing to key legislators who have raised questions about the bidding process that resulted in the pending 72 percent increase in BGE electric bills.

Schisler made the offer to Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch in response to questions they sent last week to officials at BGE and its corporate parent, Constellation Energy Group. Schisler said he wanted to assure them that the bidding process that resulted in the higher rates was fair and designed to produce the lowest possible prices for consumers.

Critics have questioned whether Constellation is making windfall profits by selling electricity to its corporate subsidiary, but Schisler said in his letter that a briefing will demonstrate that safeguards are in place to prevent such self-dealing.

"You are concerned that BGE affiliates might have received an unfair advantage in BGE's competitive solicitation. ... In light of increases in purchase power costs, it is a legitimate question to ask," wrote Schisler, a former Republican delegate from the Eastern Shore who has come under fire for close relationships with utility lobbyists.

But, he added, the commission has "built numerous structural safeguards into the process to make it as near impregnable as any human process ever could be."

Schisler's offer would address one of several questions Miller and Busch asked last week. The Assembly's Democratic presiding officers also sought information about company finances and executive pay.

The legislators asked for answers by Friday. If they are not satisfied, Miller and Busch wrote, they could exercise the legislature's subpoena power to compel answers. The request from Miller and Busch was viewed by some lawmakers as a precursor to a possible special session of the Assembly to address electricity deregulation issues.

Schisler's letter included a nine-page primer on electricity bidding processes and the need for confidentiality in discussing proprietary information about such auctions.

Electricity prices are going up for BGE customers with the July 1 expiration of rate caps instituted as part of the 1999 deregulation of Maryland's electricity market.

As part of the deregulation plan, BGE was required to divest itself of its power plants, which it transferred to another part of Constellation. BGE now buys electricity on the open market and delivers it to customers through its power lines.

Under the terms of the plan, Constellation is allowed to sell the electricity it produces at the former BGE plants to BGE through competitive bidding.

A spokeswoman for Miller said he had not received the letter yesterday.

Miller, Busch and others in the legislature have argued for greater transparency in the setting of energy rates, and the city of Baltimore is suing the PSC in Circuit Court in an effort to get some of the same information. But Schisler argued in his letter that confidentiality in some matters is in the best interests of the public.

"The design of Maryland's ... bid process requires a substantial amount of confidentiality around certain competitively sensitive information in order to protect customers from high prices and market manipulation," he wrote. "Without a certain level of protections for corporate proprietary information, potential bidders might shy away from the wholesale solicitation, thereby making the wholesale bidding process less competitive."

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Copyright (c) 2006, The Baltimore Sun

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Source: The Baltimore Sun, Maryland

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