May 17, 2006


Governor Robert L. Ehrlich, Jr.
State House
Annapolis, MD 21401


Dear Governor Ehrlich:

The proposed 72% increase in electricity rates for customers of the BG&E service territory demands a comprehensive solution that addresses this matter responsibly and compassionately for every stakeholder. Meeting with our constituents in the 41st district, we learned that three issues are important to consider:

1. True rate relief;
2. Prevention of the circumstance that created and exacerbated the current situation; and
3. Long-term protection of rate payers’ interest.

Real solutions and change will require thoughtful deliberation and courage. We must, however, move quickly to craft a reasonable solution.

We urge the convening of a special session of the Maryland legislature to pass legislation that arrests the 72% increase of the electricity rate of BG&E customers.

The constituents of the 41st District in Baltimore City deserve the attention of the entire state in this important matter. A 72% increase in electricity rates affects so many lives in ways that are poignant, convincing and ongoing.

Last week, Ronnie Rosenbluth, the proprietor of Tov Pizza, reminded us that he owns one of the oldest ongoing businesses on Reisterstown Road. He explained what the increase will do to his operation.

He may have to seek vendors from other states, as local vendors are passing the increased electricity rates into the cost of their products. Ronnie has studied his menus from earlier decades and noted that the foods he offers today continue to be reasonably priced.

Good value is the hallmark of his business and while raising prices is always an option, he is loathe to alter his business ethic. He struggles with solutions to the increase and realizes that laying off employees is also an option. The painful reality is that when local businesses suffer, the community suffers.

We also heard from an elderly neighbor who asked why was there an increase in her budget bill a month earlier. The explanation she received was that the higher rate reflects the increased cost of natural gas and that an additional increase would be coming soon to reflect the new price for electricity. The look on her face was one of astonishment and horror. What choices would she have to enable her to keep her lights or air conditioning running during the summer?

As the 41st District legislators, we hear these stories with increasing frustration. We must speedily enact sound legislation. The 41st District team proposes:

Call a special session and pass legislation that immediately provides true rate relief for BG&E rate payers.

The bill should contain the following provisions:

1. Apply the $400 million identified as “merger savings” to BG&E rate payers as credits applied to electricity bills;

2. Next year, recover the $528 million in stranded costs that never materialized but were financed by Marylanders over the last seven years. Convert the return to a credit to rate payers;

3. Restructure the membership of the PSC to better reflect the needs of all rate payers;

4. Restructure the Office of People’s Counsel to protect the interests of rate payers with effective advocacy;

5. Study the impact and possibility of competition in the retail market. Could it exist and can it work soon in Maryland? Study the impact aggregation would have on rates. Complete the study by December 2006;

6. Require the PSC to establish regulations that limit utility company profits to a “reasonable” return. Define “reasonable,” as the law did before 1999, and return excess profits to rate payers;

7. Examine executive compensation in the manner in which we examined and limited compensation of Care First executives;

8. Require utility companies to present to the public an energy/electricity plan by September of every year that outlines and establishes strategies and expectations for the upcoming winter season;

9. Require the PSC to mandate that electricity companies build and maintain additional power plants so that less electricity is purchased from other sources;

10. Publish the true cost of electricity, based on the aggregate cost of electricity components;

11. Require that electricity auctions be held in public with bidders names also made public; and

12. Protect the Constellation headquarters in Maryland and mandate that certain public service commitments from Constellation extend well past the five years contemplated. The merged company’s public service commitment must reflect the increased value of the new, larger entity.

We are listening to our constituents and they raise valid concerns and suggestions for relief. We ask you, as we have also asked the presiding officers of the General Assembly, to act to save the citizens of Maryland from the grave consequences of this extraordinary rate increase.

Yours truly,


Lisa A. Gladden     Jill P. Carter      Nathaniel T. Oaks      Samuel I. Rosenberg
State Senator          Delegate           Delegate                     Delegate