Utility humility

0
29

The Baltimore Sun today reports on the ads BGE parent company Constellation Energy Group has been running to combat the political rhetoric over the 72 percent rate increase (now just 37 days from hitting according to the Fight BGE blog). The ads are Constellation’s attempt to convince us customers that we’re not paying an exorbitant amount for energy compared to our neighbors in other states and the steep increase isn’t the company’s fault. Indeed, it’s the rate cap state legislators, dazzled by Enron’s prestidigitation, screwed on in 1999 that kept our rates artifically low in an unsuccessful attempt too woo competitors. Now that the time has come for the rate cap to come off, we get hit full on with the increases that were kept under wraps all this time. Today’s story indicates that, according to the BGE ads, had the legislators not held the prices artificially low, the increase would have amounted to mere 3.5 percent a year. (For more on this see The Sun’s Electric Shock blog) An increase of 3.5 percent (or thereabouts) would have been manageable. An increase of 72 percent all of a sudden is not so manageable. And that’s what gives this issue a sort of French Revolution feel. While commoners must pay up, the royalty that runs the electricity company is due to make a windfall, due in large part to the inconvenient timing of the company’s pending merger with Florida Power & Light. But it can’t help roiling us that the executives responsible for the company that is about rattle the populace’s comfort will at the same time be making their own fortunes infinitely more comfortable. It reminds me of the ire raised by CareFirst BlueCross Blue Shield’s plan to convert to for-profit operation and be sold a couple of years ago. Here again, a company that delivered essential medical insurance to an enormous swath of the toiling public was about to make a deal that seemed to take better care of the executives than the customers. According to Baltimore Sun stories written at the time, state legislators were able to block the company’s attempts to switch from non-profit to for-profit status and richly reward its leaders. CareFirst CEO William Jews caught on and sought reconciliation with state legislators and the public. Then last year, Jews’ company agreed to absorb a 2 percent premium tax on HMOs to help cover an increase in malpractice insurance costs rather than passing it on to consumers. Legislators don’t seem to have much leverage with for-profit Constellation. But the company’s leaders could take a page from Jews’ playbook and stop telling us we baked our cake. Now it’s time to eat it.