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MEDIA ADVISORY
Contact:
Senator Jim Rosapepe, (202) 271-5545
Senator E.J. Pipkin, (410) 924-2787
Katie Nash, 401-841-3639
State Senators, AARP, Consumer Groups Renew Call for Reregulation;
New Study Projects 17% Rate Cut for BGE Customers
What: Press Conference to call for reregulation through new electricity generation
Who:
State Senator Jim Rosapepe (D-College Park)
State Senator E.J. Pipkin (R-Upper Shore)
Jeff Hooke, Maryland Tax Education Foundation
Fielding Huseth, MaryPIRG
Hank Greenberg, MD AARP
Rion Dennis, Progressive Maryland
When: Noon, Tuesday, March 9, 2010
Where: Neall Conference Room, 2nd floor James Senate Building
11 Bladen Street, Annapolis, MD
Why: To end deregulation through regulated new power generation, and to provide consumers with lower rates
Annapolis, MD (March 9, 2010)—Senators E.J. Pipkin (R-Upper Shore) and Jim Rosapepe (D-College Park) will hold a press conference to call for reregulation of Maryland’s electricity market. Senators Rosapepe and Pipkin are the lead sponsors of SB 807, the Electricity Market - Goal of the State - Best Possible Price for Ratepayers Through Reregulation.
The bill directs the Public Service Commission (PSC) to develop a plan to build new, regulated electricity generation plants that would significantly reduce the cost of electricity for Maryland ratepayers. The legislation re-enforces Governor O'Malley's December 2009 letter to the PSC urging them to begin reregulation. The letter can be found at www.ReRegElectricRates.com.
Several organizations will be on hand to support SB 807, including MaryPIRG, AARP and Progressive Maryland.
According to a new study to be released at the press conference by the Maryland Tax Education Foundation, new BG&E generation plants, regulated by the PSC and fueled by natural gas, would save residential ratepayers 17% annually (or $400 million) compared to current prices paid by BG&E for power.
Links to more information
Support SB 807 --
Electricity Market - Goal of the State - Best Possible Price for Ratepayers Through Reregulation
Click here to view the 2010 bill
Sun misses key facts in Constellation-EDF deal
September 25, 2009
Baltimore Sun
The Sun's thoughtful editorial on the Constellation Energy Group/Électricité de France deal ("PSC's power play," Sept. 20) missed the mark on a few points:
1. Baltimore Gas & Electric's bond rating: If the EDF deal doesn't close and Constellation's bond rating falls, the impact on BGE's capital cost is minimal. Constellation has any number of tactics to boost its rating (and thus BGE's rating) over the next 12 months, such as asset or stock sales to raise cash. If these tactics require more than one year to implement, the higher interest cost to BGE is felt only on maturing debt, which has to be refunded soon, as opposed to the vast majority of debt maturing over the next 10 years.
2. Calvert Cliffs expansion: The proposed third reactor at Calvert Cliffs is one of only three in the nation with the ability to move quickly. If EDF doesn't build the plant, some other giant energy firm will come in to take its place, just as EDF replaced Mid American in 2008.
3. Conflict between Constellation generating operations and BGE: Neither The Sun nor the PSC has focused on the inherent conflict in the fact that Constellation's Maryland plants furnish most of BGE's power. Constellation has an incentive to keep local electricity prices high in order to maximize profits at its generating plants. Since BGE is a captive of Constellation, it has zero incentive to protest or to lobby for a change in the local power market that will boost supply and cut price. Ring fencing fails to address this dynamic, which underlies much of the ratepayers' problems.
Jeffrey Hooke, Bethesda
Jeff Hooke's testimony to 9/14 PSC hearing
click here
Press Release
Sept. 14, 2009
For Immediate Release
Pipkin, Rosapepe, Consumer Group join MTEF in asking PSC to Reregulate, Reduce BGE rates 15% as part of Constellation bailout
Today Senators E.J. Pipkin (R, Upper Shore) and Jim Rosapepe (D, PG and Anne Arundel), along with major statewide consumer groups, urged the PSC to promptly adopt the proposal to condition approval of the Constellation/EDF bailout on reregulation and a 15% permanent reduction in BGE rates, as outlined in testimony submitted by Jeff Hooke, Chairman of the Maryland Tax Education Foundation (MTEF). The Maryland Coalition for BGE Reregulation is among groups that support this proposal.
"Mr. Hooke's testimony, based on rigorous, professional analysis, estimates the value of the proposed Constellation bailout at $2 billion," Senators Pipkin and Rosapepe wrote to the PSC. "The company, which drove consumers electric rates up more than 70 percent since deregulation propose to the PSC that the company and its shareholders receive almost all of the benefits, while ratepayers receive only 2% of the $2 billion windfall from the EDF bailout.
"We disagree," they wrote. "Like Governor O'Malley, we urge the PSC to obey the law and only approve the bailout if the deal is 'in the public interest.' That means adding conditions which begin permanent reregulation of electric rates in Maryland and return a major portion of the bailout to hardpressed ratepayers."
Hooke calls for the PSC to reduce, through re–regulation, consumer BGE rates by 15% as part of the transaction. This would share the $2 billion bailout windfall with BGE consumers. His testimony, which is attached, argues that:
(i) Constellation's proposed transaction lacks substantial benefits for ratepayers and the State of Maryland, yet is a windfall for CEG.
(ii) Of the estimated $ 2 billion in benefits accruing to Constellation stockholders, just $36 million (or 2%) is reserved for Maryland residents though a Constellation charitable program. No benefits are provided whatsoever for ratepayers;
(iii) The ratepayers of Maryland would continue to prop up Constellation financially;
(iv) The transaction threatens the ability of the Baltimore Gas and Electric Company, the regulated utility subsidiary of Constellation, from supplying economical and reliable electricity to its standard-offer-service (SOS) ratepayers; and
(v) The transaction perpetuates, within the CEG corporate umbrella, conflicts of interest that are untenable for BG&E as a public utility, and likely perpetuates the current system of ratepayers paying higher electricity than probable under a regulated arrangement.
(vi) The transaction should be viewed as an anti-trust action, rather than a review of a business.
A copy of the Senators' letter to the PSC is below.
Sept. 14, 2009
Douglas R.M. Nazarian
Chairman
Public Service Commission
Office Of The Commissioners
William Donald Schaefer Tower
6 St. Paul St., 16th Floor
Baltimore, MD 21202
Dear Mr. Chairman:
We write to express our strong support for the testimony of Jeff Hooke, submitted on behalf of the Maryland Tax Education Foundation (MTEF).
We encourage you to consider his testimony in your deliberations and to reflect on the sharp contrasts between his testimony and that of the Constellation representatives.
Mr. Hooke's testimony, based on rigorous, professional analysis, estimates the value of the proposed Constellation bailout at $2 billion. The company, which drove consumers electric rates up more than 70 percent since deregulation propose to the PSC that the company and its shareholders receive almost all of the benefits while ratepayers receive only 2% of the $2 billion windfall from the EDF bailout.
We disagree. Like Governor O'Malley, we urge the PSC to obey the law and only approve the bailout if the deal is 'in the public interest.' That means adding conditions which begin permanent reregulation of electric rates in Maryland and return a major portion of the bailout to hardpressed ratepayers.
We thank you for your attention and urge you to continue in your important work.
Sincerely,
E.J. Pipkin Jim Rosapepe
Senator Senator
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Jeffrey C. Hooke is Managing Director of Hooke Associates, LLC, a corporate finance consulting practice based in Bethesda, Maryland. The firm provides advisory services regarding mergers and acquisitions, corporate finance and valuation. Previously, he was a private equity executive and investment banker In New York and Washington..
He is the author of four authoritative books on finance and has at several universities. He is the unpaid, volunteer Chairman of the Maryland Tax Education Foundation, a non profit, non partisan research institute that focuses on budget and tax issues in the state of Maryland ( www.marylandtaxeducation.org) Mr. Hooke lives in Chevy Chase, MD. He is a native of Baltimore and attended Baltimore City public schools.
John Coyle, who represents MTEF pro bono in this case, is a partner in Duncan & Allen, a Washington, D.C., law firm engaged in representing consumer-owned utilities and other consumer interests in the electric utility field, and has over 20 years experience in the representation of those interests before the Federal Energy Regulatory Commission, state utility regulatory commissions, and federal and state courts. Mr. Coyle lives in Silver Spring, MD.
The MD Coalition for BGE Reregulation is a grass-roots coalition of citizens who have been fighting for several years to guarantee affordable electricity rates through the re-regulation of BG&E. Members of the Coalition have been visibly active and vocal and fearless in taking on arguably the most powerful corporation in the state, Constellation Energy.
Summary of the June 2 settlement proposal from the State.
click here
Complete settlement proposal, issued to Constellation Energy on June 2, 2009.
click here
Press Release
June 2, 2009
For Immediate Release
Pipkin, Rosapepe Back 10% Savings
in Reregulation of BGE Rates;
Urge PSC to Make it Condition for
Approval of Constellation/EDF Deal
Today Senators E.J. Pipkin (R, Upper Shore) and Jim Rosapepe (D, PG and Anne Arundel), wrote a letter to Public Service Commisssion (PSC) Chairman Doug Nazarian, urging the PSC to promply adopt the re-regulation proposal developed by Jeff Hooke, Chairman of the Maryland Tax Education Foundation (MTEF). The plan would reduce consumer BGE rates by at least 10% and increase Constellation's stock price by $4 to 8 per share, according to Hooke's analysis.
The reregulation proposal is consistent with Governor O'Malley's priorities as detailed in his Chief of Staff's May 21 letter to Constellation Energy.
Attached is Hooke's analysis and recommendations.
The text of the Senators' letter follows:
June 2, 2009
Douglas R.M. Nazarian
Chairman
Public Service Commission
Office Of The Commissioners
William Donald Schaefer Tower
6 St. Paul St., 16th Floor
Baltimore, MD 21202
Dear Mr. Chairman:
We write to share our thoughts on how the PSC can quickly bring the CEG/EDF case to a conclusion for the benefit of BG&E ratepayers, as well as the two firms and their shareholders. Attached is a re-regulation proposal developed by Jeff Hooke, Chairman of the Maryland Tax Education Foundation (MTEF), and a respected investment banker with extensive experience in the utility industry. His proposal is consistent with Governor O'Malley's priorities as detailed in his Chief of Staff's May 21 letter to CEG. We endorse the MTEF proposal and urge the PSC to adopt it promptly.
The proposal’s key points are the following:
-- Conditional approval of the CEG/EDF transaction, based on the two firms’ agreement to sign long-term contracts at PSC regulated rates with BG&E's SOS plan for residential and small commercial customers. The ten Maryland power plants should provide enough electricity to fulfill SOS needs.
-- Renegotiation of the CEG/EDF transaction price to reflect the impact of re-regulation on the projected earnings of the CENG joint venture.
-- Reduction of the $1.1 billion termination fee CEG paid to Mid-American and the promise by CEG to use its best efforts to obtain such reduction. Not only does the fee have a potentially harmful effect on BG&E ratepayers, but legal research undertaken by an experienced counsel retained by MTEF suggests that the fee may be excessive ( and therefore illegal) under Maryland corporate law. A copy of that research was provided to the PSC earlier.
MTEF’s analysis estimates that (i) the long term supply contracts based on regulated rates; and (ii) a termination fee reduction, would:
-- Reduce rates for SOS customers by a minimum of 10%
-- Stabilize SOS rates going forward
-- Have a positive impact on Constellation Energy by removing uncertainty
We urge you to move promptly to adopt this proposal. This would end uncertainty in the energy and financial markets, set up a model for the entire State, and place Maryland's energy policy back on the side of the ratepayers.
Sincerely,
EJ Pipkin Jim Rosapepe
Senator Senator
4/13/09 UPDATE: SB 844 got an unfavorable vote in the House Economic Matters Committee
Rereg is dead for this session but we'll come back next year. Please sign up if you want to help
4/1/09 UPDATE: SB 844 has passed the Senate
Senators who voted YEA:
Astle, John C. (D), District 30
Brochin, James (D), District 42
Conway, Joan Carter (D), District 43
Currie, Ulysses (D), District 25
Della, George W., Jr. (D), District 46
Exum, Nathaniel (D), District 24
Frosh, Brian E. (D), District 16
Harrington, David C. (D), District 47
Jones, Verna L. (D), District 44
Kasemeyer, Edward J. (D), District 12
Kelley, Delores G. (D), District 10
Kramer, Rona E. (D), District 14
Lenett, Michael G. (D), District 19
Madaleno, Richard S., Jr. (D), District 18
McFadden, Nathaniel J. (D), District 45
Middleton, Thomas M. (D), District 28
Miller, Thomas V. Mike, Jr. (D), Senate President, District 27
Munson, Donald F. (R), District 2
Muse, C. Anthony (D), District 26
Peters, Douglas J. J. (D), District 23
Pinsky, Paul G. (D), District 22
Pipkin, E. J. (R), District 36
Raskin, Jamin B. (Jamie) (D), District 20
Robey, James N. (D), District 13
Rosapepe, James C. (D), District 21
Stone, Norman R., Jr. (D), District 6
Zirkin, Robert A. (Bobby). (D), District 11
Gov. O'Malley backs re-regulation
Click here to read press release
Maryland consumers recognized long ago that the state's deregulation of electric rates in 1999 has been a catastrophe for us and our state. In a failed market where electric generators earn monopoly profits and no new capacity has been added since 1999, the right answer is reregulation.
Regulating electric utilities worked for more than 100 years in Maryland and works in most states which never deregulated. That's why we've drafted SB 844 / HB 1530 to end deregulation in a prudent way which protects consumers.
Please join our fight for consumers by reading the information on this site, share it with your friends, sign up to be kept informed on the fight, and let your legislators and the governor know that you agree it's time to end the failed experiment with electric deregulation.
Senator Senator Senator
Mac Middleton E.J. Pipkin Jim Rosapepe
Delegate Delegate
Michael Smigiel Herman Taylor
Support SB 844 / HB 1530 --
Public Service Commission - New Electric Generation Facilities - Rate Regulation and Contracts
Click HERE to contact your lawmaker
Click here to view the 2009 bill
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