Lights Out In Maryland
I share with you, dear reader, a perspective (that I happen to share) from the Wall Street Journal.
Lights Out in MarylandApril 15, 2006; Page A6
No homeowner would be overjoyed to hear that his electric bill is going up by 72% on July 1. In an election year, that just might make him mad enough to blame the politicians seeking his vote.
So it goes in Baltimore and surrounding areas in central Maryland, where 1.2 million homeowners were informed recently that they would have to shell out an average of $743 more a year for electricity, and where the Governor and every member of the state legislature are up for re-election in November.
But if lawmakers are worried, they have only themselves to blame. In 1999 the assembly imposed price controls as part of legislation deregulating the state's electrical power industry. Hoping to avoid taking political responsibility for that decision, the legislators froze residential rates at 1993 levels minus 6.5%. Seven years later that political bill is now coming due.
The legislature's ire has focused on Constellation Energy Group, parent of Baltimore Gas & Electric Co., the state's largest electric utility. In an effort to blackmail the utility into agreeing to below-market rates, it tried to block a planned merger between Constellation and Florida Power & Light that has nothing to do with the rate increase. Not only was this probably unconstitutional -- the U.S. Constitution protects interstate commerce -- it was arguably illegal under state law. The assembly wanted to bypass the Public Service Commission, the regulatory body created nearly a century ago with the specific aim of insulating public utilities from politics. The commission is currently evaluating the proposed merger.
But the politicking didn't stop there. Legislation passed both houses requiring the merger to be studied by Attorney General Joseph Curran Jr. Mr. Curran happens to be the father-in-law of Martin O'Malley, the Democratic Mayor of Baltimore running for governor against Republican incumbent Robert Ehrlich. The legislation called for Mr. Curran's office to report back in January -- a convenient two months after the election.
The effort fell apart last week when the Governor vetoed the legislation as well as a second bill stripping him of the power to appoint members to the Public Service Commission. The Governor then worked out a deal with the House to reintroduce price caps (with moderate increases) until 2009. But the Senate wouldn't go along so neither the compromise bill nor an override of the vetoes passed before the legislative session expired on Monday. Governor Ehrlich is now trying to work out a deal for lower rates with Constellation, while also considering calling the legislature back to Annapolis. But why bother? The longer the legislature stays out of session the safer everyone is.
Constellation is the only Fortune 500 company headquartered in Baltimore. It employs hundreds of people at an energy trading floor downtown -- jobs that could easily be moved to a friendlier state. After this experience, it's not hard to understand why Constellation might want to do just that.
This episode is just one more example of how Maryland is developing a reputation for being a bad place to do business. Within the past year, the legislature has increased the minimum wage and foisted a new health-care tax onto Wal-Mart. During his four years in office, Governor Ehrlich has had to beat back $7.5 billion in tax hikes in a state with a budget of about $29 billion. The message being sent to job creators is clear: Lights out.
Lights Out in MarylandApril 15, 2006; Page A6
No homeowner would be overjoyed to hear that his electric bill is going up by 72% on July 1. In an election year, that just might make him mad enough to blame the politicians seeking his vote.
So it goes in Baltimore and surrounding areas in central Maryland, where 1.2 million homeowners were informed recently that they would have to shell out an average of $743 more a year for electricity, and where the Governor and every member of the state legislature are up for re-election in November.
But if lawmakers are worried, they have only themselves to blame. In 1999 the assembly imposed price controls as part of legislation deregulating the state's electrical power industry. Hoping to avoid taking political responsibility for that decision, the legislators froze residential rates at 1993 levels minus 6.5%. Seven years later that political bill is now coming due.
The legislature's ire has focused on Constellation Energy Group, parent of Baltimore Gas & Electric Co., the state's largest electric utility. In an effort to blackmail the utility into agreeing to below-market rates, it tried to block a planned merger between Constellation and Florida Power & Light that has nothing to do with the rate increase. Not only was this probably unconstitutional -- the U.S. Constitution protects interstate commerce -- it was arguably illegal under state law. The assembly wanted to bypass the Public Service Commission, the regulatory body created nearly a century ago with the specific aim of insulating public utilities from politics. The commission is currently evaluating the proposed merger.
But the politicking didn't stop there. Legislation passed both houses requiring the merger to be studied by Attorney General Joseph Curran Jr. Mr. Curran happens to be the father-in-law of Martin O'Malley, the Democratic Mayor of Baltimore running for governor against Republican incumbent Robert Ehrlich. The legislation called for Mr. Curran's office to report back in January -- a convenient two months after the election.
The effort fell apart last week when the Governor vetoed the legislation as well as a second bill stripping him of the power to appoint members to the Public Service Commission. The Governor then worked out a deal with the House to reintroduce price caps (with moderate increases) until 2009. But the Senate wouldn't go along so neither the compromise bill nor an override of the vetoes passed before the legislative session expired on Monday. Governor Ehrlich is now trying to work out a deal for lower rates with Constellation, while also considering calling the legislature back to Annapolis. But why bother? The longer the legislature stays out of session the safer everyone is.
Constellation is the only Fortune 500 company headquartered in Baltimore. It employs hundreds of people at an energy trading floor downtown -- jobs that could easily be moved to a friendlier state. After this experience, it's not hard to understand why Constellation might want to do just that.
This episode is just one more example of how Maryland is developing a reputation for being a bad place to do business. Within the past year, the legislature has increased the minimum wage and foisted a new health-care tax onto Wal-Mart. During his four years in office, Governor Ehrlich has had to beat back $7.5 billion in tax hikes in a state with a budget of about $29 billion. The message being sent to job creators is clear: Lights out.
posted by hocoblog at 8:03 PM
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