Sunday, March 19, 2006

Is Rush Going to Help With My Power Bill?

I was talking to a friend, from the Midwest, this weekend. I was trying to explain how I am looking at a 72% rate hike in my electric bill in June. She asked, "I thought Maryland was a Democratic paradise. How come the people are allowing this to happen?" I replied," Well, the first problem is that common sense is at a premium here. The second is that Marylanders are so used to getting screwed by government and business, they don't know any better."

What I told her is true. If Constellation Energy had, instead, implemented four successive increases of 20%, this issue would have likely flown under the radar. Small consistent increases are standard operating procedure in the price-fixing strategies of their brethren in the petroleum industry, so why didn't Constellation follow suit? I'm not sure, but I'd wager that rampant greed is part of the equation.

Here is what I do know:

1. The Maryland Public Service Commision (PSC) Is Owned By Electric Utilities
The Maryland Public Service Commision's role is to protect the interests of the citizen's of Maryland in matters of electric utility regulation. Instead, Republican Governor Ehrlich has appointed party cronies as commissioners to the PSC. These commissioners, in turn, fired experienced staffers and replaced them with more party cronies. On Saturday, the Baltimore Sun revealed that chair Kenneth Schisler has been consulting with an electric industry lobbyist with respect to strategy on how to keep deregulation on track in the face of the unpopularity of the impending 72% rate hike. In other words, the state agency that is empowered to protect us from electric rate price gouging, has, instead, been taking direction from the industry that will be gouging us.

2. Constellation Energy Is Creating Crisis For Profit
WBAL quotes BGE spokesman Rob Gould, "Our position continues to be that anything that penalizes BGE for something that's totally out its control, in this case, the world energy markets and supply and demand -- something we don’t control -- is simply inequitable." This situation is not out of BGE's control, it was caused by BGE. In July 2001, BGE was allowed, (pg 10, Electric Regulatory Matters and Competition) under the terms of the deregulation agreement, to transfer all of its power generation facilities to Constellation Energy's unregulated merchant energy business. Thus, the rolling blackouts that Constellation is threatening are due to the fact that the power plants that BGE's customers paid for will now be selling their power to the highest bidder. The rising costs of electricity that BGE continually cites are the costs of buying electricity, not producing it. Gould goes on to say,"The market price is the market price, we can't do anything about that. It's simply a pass-through. BGE does not profit from the commodity piece of this, counter to what some people may think." BGE may not profit from high market prices, but the merchant energy division of Constellation certainly will.

3. Constellation Is Lying
To listen to Constellation's CEO, Mayo Shattuck III, you could get the idea that the status quo has not been profitable for BGE or Constellation. In an interview with Paul Adams of the Baltimore Sun, Shattuck stated, "In Maryland, we've been under a rate freeze for six years, and during that period of time the customers ... have been, in effect, subsidized and protected against market rates for power..." Subsidized is the NeoCon code word for welfare. And we all know that welfare is the ultimate menace, next to Clinton's infidelity, of course. In actuality, Constellation and BGE are both, indeed, profitable (pg 31): Thus, the hardship that Constellation complains of is that they are not able to reap enormous profit margins.

BGE Annual Results (millions)

2005200420032002
Revenue 3009.32724.72647.62547.3
Expenses2612.82353.32262.62181.0
Earnings175.8 153.1150.0129.9
%Profit6.736.516.635.96

4. The Corruption is Bipartisan
When asked about the status of the proposed merger with FPL, Shattuck says. "The Maryland legislature at the end of the day will make a sound decision, like they have in the past. They will not do anything that's confiscatory, that's anti-commerce." This is a fairly arrogant statement. It's sounds like Shattuck believes that the the legislature owes Constellation Energy. In fact, they probably do. Constellation Energy's Political Action Campaign has pumped over $130,000 in campaign contributions into the state legislative and executive branches since January 2004, with the largest contribution of $25,000 going to the Democratic Central Committee. The Repuclican Central Committee pocketed $10,000, while Ehrlich's campaign received $4,000.

Constellation did not make this contributions for any other reason but to ensure that deregulation stays on track. In my opinion, campaign contributions are little more than institutionalized bribery. They have almost completely circumvented the democratic process, transforming elected officials into corporate stooges.

5. Competition
When Democratic Governor Glendening and the Democratic majority of the legislator, voted to enact deregulation in 1999, they say that they were promised that competition between power suppliers would guarantee low rates for consumers. To date, this competition has never materialized. Constellation Energy attributes this to the the 6 year rate freeze and they are likely correct. It is possible for additional power suppliers to enter our market in the future. However, with the castration of the PSC and endless campaign contributions, Marylanders will have little protection from price manipulation and collusion. Look at what is happening at the gas pump, if you doubt this.

6. Solutions
A. It is clear that the Maryland PSC is woefully derelict in its duties. The legislature should initiate impeachment action against Ehrlich, unless he agrees to replace all of the PSC commissioners with non-industry stooges.

B. The legislation that allowed deregulation should be repealed. Rates should be fixed and Constellation Energy should be forced to transfer its power generation assets back to its regulated BGE subsidiary. These assets would provide sufficient generation capacity for Maryland and ensure that we are not subjected to demand fluctuations from other regions. If BGE wants to sell excess capacity on the open market, that is acceptable, but Marylanders come first.

C. Any losses (and I don't mean anticipated profits) that are incurred by Constellation by the implementation of B, should be borne solely by Constellation's shareholders. This is a reasonable penalty for getting caught with their hand in the cookie jar. Energy is far too important of an economic commodity, to allow profiteering.

In conclusion, I don't anticipate that any of these solutions will be implemented. I've already heard Dittoheads regurgitating the talking points fed to them by corporate shills like Ron Smith. Somehow these people lack the circumspection to realize how idiotic they appear when they arguing to cut their own throats. Regardless, so long as we can afford enough juice to keep our teevees on, I expect that Constellation will be allowed to run amok.

10 Comments:

At 12:45 PM, Blogger Kira said...

All I can say is when my local Fox news station is even slightly critical of anything Erlich does (as they were on the news last night, to my great shock), something don't smell right.

 
At 2:06 PM, Anonymous Anonymous said...

You should totally submit this commentary to the local newspaper, they might actually print it.

Doesn't this sound like Enron and the California brownouts all over again? And we all know what a scam that turned out to be.

 
At 2:13 PM, Anonymous Jennifer said...

Yikes! I'm moving to Baltimore from Chicago in August and don't like the sound of this one bit. Sounds like I'll be moving to CA circa 2001.

 
At 4:49 PM, Blogger Cham said...

Bottom line, we need to kill Ehrlich.

(And I don't give a crap what "Homeland Security" stooge shows up at my door for that comment)

 
At 8:25 PM, Blogger tfg said...

This comment has been removed by a blog administrator.

 
At 9:18 PM, Blogger tfg said...

kira-Faux was ripping Ehrlich? I hoped you TiVo-ed it.

anon-The difference between Maryland and California is that California had no spare power capacity. Maryland does but Constellation wants us to compete with the rest of the country to buy it.

jennifer-I doubt we'll see blackouts, we'll cave to Constellation.

Cham-Easy. Impeachment be will fine.

 
At 9:59 AM, Anonymous Jennifer said...

Thought you'd be interested in reading this. Looks like the Chairman of the Board of Regents for the University of Maryland is doing his part too.
http://www.insidehighered.com/news/2006/03/20/nevins

 
At 10:00 AM, Anonymous Jennifer said...

Oops, looks like the address was cut off. Here it is on two lines.
http://www.insidehighered.com/news
/2006/03/20/nevins

 
At 9:07 PM, Blogger elcapitanhink said...

Aww, c'mon. Don't you think they deserve their shot at raw profit-taking? I mean, those oppressive, draconian federal laws governing incorporation already keep (for now) them from holding all of their assets in Caribbean tax shelters... how unAmerican can you get with this?


Caveat Emptor, Pinko! Time for you to get one of those Faraday flashlights.

P.S. Ditto Ditto Ditto Ditto Ditto Ditto Ditto Ditto!

 
At 11:24 AM, Blogger TheIdleReceptionist said...

Politicians that can be bought are AWE.SOME.

 

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