After months of preparation, followed by unexpected delays of the deregulation of Maryland’s electric power industry, the issue moved to its next phase this week with a hearing scheduled July 20.

Unfortunately, as of press time, the results of the hearing had not yet been released. The new plan was to be put into effect July 1, and affect the 1 million residential power customers of BGE by reducing their current bills by 6.5%, creating a new, lower rate, at which their bills would remain for the next six years.

But on June 30, just hours before deregulation was to take effect, Maryland’s highest court prohibited the start of the plan in Baltimore’s metropolitan region. The court’s decision followed an appeal filed by the New Jersey-based Mid-Atlantic Power Supply Association (MAPSA), which claimed that the proposed plan would not create real competition for the current monopoly, BGE, because it favors the currently reigning company. MAPSA claimed that BGE’s rate reduction was too low for any suppliers to compete with.

The June 30^th court order also called for this week’s hearing. Although deregulation was brought to a screeching halt in the Baltimore metropolitan area, it was still carried out in other areas in Maryland, including Prince George’s and Montgomery counties.

And although BGE filed an emergency motion for reconsideration, the court stood firm in its decision to entertain a July 20 hearing. The delay meant that the six year, 6.5% rate reduction was not put into effect.

Glenn F. Ivey, chairman of the Maryland Public Service Commission, has played a key role in the BGE deregulation saga. Always in support of deregulation, Mr. Ivey has been trying to get the process back on track as quickly as possible. The PSC, under his leadership, launched a $5.6 million advertising campaign back in April in support of deregulation, and he himself has been a constant spokesperson promoting and defending the merits of deregulation.

Mr. Ivey has served in his current position since March 1998. Before his appointment by Governor Parris N. Glendening, he served as Chief Counsel to U.S. Senate Democratic Leader Tom Daschle. A graduate of Princeton University and Harvard Law School, Mr. Ivey’s career has included serving as Counsel to the Senate Whitewater and Banking Committees, Assistant U.S. Attorney for the District of Columbia, and Senior Legislative Assistant to U.S. Representative John Conyers. Mr. Ivey is a member of the National Association of Black Prosecutors, the Maryland State Bar Association, as well as many other lawyer’s associations.

This week, we present the first of a two-part conversation between the AFRO’s editor-in-chief Steve Cupid Theodore and Chairman Ivey on the status of electricity deregulation in Baltimore.

Steve Theodore: Let me go first by getting you talking about where we stand right now on electricity deregulation in Baltimore. This is the week of the July 20 hearing. Now, I believe that part of the hearing was devoted to the question of whether the New Jersey based group actually had standing, as opposed to whether the regulation would actually be back on track. Can you make it clear for our readers exactly what to expect after this hearing?

Glenn Ivey: It sounds like what they’re going to do is deal with standing-- which is sort of one piece-- and the other is the stay. If the court finds that the stay is inappropriate and lifts it, then people would immediately get their rate reduction. And that’s our expectation, but we’ll have to see.

Per standing, what it means is that they could go and litigate all the issues, which they have the legal right to raise in court. I’m not as worried about that- I just think that those could take a while to play out. I think we’ll win ultimately, but the main thing is, if the stay is lifted, the benefits could start flowing to customers immediately.

ST: Let’s go back a bit to basically the beginning of the deregulation movement here in Maryland. Why do you feel that this is an important thing to have happen at this time, and how is it that BGE was willing to participate in what would ultimately mean more savings to consumers?

GI: I think there were a couple of things that got it started. One was that a lot of states around us were already doing it, Pennsylvania in particular. They were starting to use it as a way to attract businesses that were thinking about locating in Maryland or were in Maryland already, and encouraging them to relocate there. And the reason is that a lot of businesses, especially manufacturing types of businesses, have extremely large amounts of their fixed costs driven by the cost of electricity. So for those types of businesses, it’s pretty attractive.

So in part what you saw was an effort to try and address that, so we have a level playing field in competing for those kinds of businesses and maintaining the ones that we’ve got. Some of the bigger companies that were really interested in this- East Coast Alcoves, the GMs- the loss of those would be very serious from a jobs standpoint, and also from the standpoint of the economics of providing electricity, and the tax base, all kinds of things- a big ripple effect.

Once there was sort of a recognition to move forward, I think a number of other interested parties and stakeholders said that , well, "If it’s going to move forward, let’s see if we can get some things that benefit other constituencies." And that’s how I think you ended up with things like the rate reduction, the universal service fund, which is a $34 million fund that didn’t previously exist, and those types of provisions.

ST: And tell me what the purpose of the fund is.

GI: The fund is to help low-income people pay for electricity who have trouble doing so. So what you get right now-- those tend to lead to stories like the house is burning down in the middle of the road because someone’s heat got cut off and they’re trying to heat the house another way, or the lights were cut off and they were using candlelight. Those types of tragedies tend to revolve around affordability issues. This was aimed at addressing that problem- the heating-or-eating tradeoff that a lot of people face.

ST: So now, that consumers will have to wait probably until some issues are settled in court to see their 6.5% decrease, does that similarly hold for the disbursement of the assistance fund?

GI: Well the companies and the parties have moved forward with the universal service fund. There was some initial confusion as to how to move forward with that, and we are still sorting through some of it- but we’re moving forward with the universal service fund.

ST: Ok. What exactly is the Public Service Commission’s hope for the way the competition will look after deregulation? Isn’t managing electricity quite a large gambit for some companies, and in some states not a large number of companies have rushed in because of what they see as limited profit margins. How rosy will the picture of competition look after all of this is settled?

GI: Well, I think it depends on the timing. Sort of immediately after, I’m not expecting there to be a huge rush to abandon the current standard offer service and switch to a supplier- you know you’ll see that over time. But the experience in most states is that, generally speaking, inertia sort of guides the initial phases of the process, for the first month or year or so.

What we hope to see over time is people experimenting a little bit, taking a look at what other suppliers are offering, hopefully we’ll get suppliers offering alternative types of products like green, environmentally friendly, types of products that might draw people away for other reasons. That’s been true in other states to some extent.

ST: and that would include alternate energy sources as well?

GI: That just means that instead of using typically fossil fuels to generate the electricity, do it in some other way, solar wind, hydro, in some cases but things that are less taxing on the environment.

But I think over time what you want to have is people feeling that they’ve got real choices of suppliers that they can go to if they’re dissatisfied with the service they’re currently getting.