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David Nitkin on state politics issues

Electricity ratesStuart, Baltimore: How can the mayor of Baltimore run a campaign praising hisefforts for fighting the [Baltimore Gas and Electric Co.] rate increase? Due to his court action, the consumer is now in a worse situation than before. Everyoneknows that the president of the Senate, [Thomas V. Mike] Miller, is the one who dropped the ball when the legislature was still in session.

Nitkin: [Baltimore Mayor Martin O'Malley's] court action has prompted a special session of the General Assembly, which is expected to yield legislation that is roughly as helpful to consumers as a plan that failed during the regular session (which was supported by Gov. Robert L. Ehrlich Jr.). Under the plan, consumers would pay 15 percent more for electricity on July 1 (rather than 72 percent all at once) with more increases to be determined later. Indeed, a rate relief plan died in the Senate in April; in a special session, Miller hopes to make amends.

Steve Huttle, White Marsh: I don't live in the city, so why am I forced to give up the deal that Ehrlich negotiated just because a city judge issued a ruling against the [Public Service Commission]? I don't believe that O'Malley has the right to speak for counties outside of the city limits.

Nitkin: Baltimore City was given standing in the case, meaning thePSC and the courts determined that the city could intervene. So the courtsand the PSC disagree with your position.

Andrew, Jacksonville: Is Ehrlich's letter to the House and Senate leaders reallyan attempt to get better rates, or is it simply a cheap political tactic to try and push the blame to O'Malley? If Ehrlich really wanted to help the working class, wouldn't it be more effective to replace the four PSC members that he put on the board who have done nothing to protect us?

Also, isn't at least one of those [that] Ehrlich appointed [to the] PSC a former BGE employee? If so, that seems like a serious conflict of interest.

Nitkin: Actually, the former BGE employee, PSC Commissioner HaroldWilliams, is the lone remaining appointee of former Gov. Parris N. Glendening. There's lots of finger-pointing going on over the BGE rate issue. The governor is blaming O'Malley for a less-favorable relief plan adopted by the PSC, a result of the O'Malley lawsuit. The mayor blames the governor for appointing PSC members who he says are looking out for business, not consumers.

Rachel, Baltimore: There is not enough information about the rate stabilization plan and the right to "opt out." The 1-800 number does not allow you to reach a live person. My question is, if I decide to opt out now, and the General Assembly or Circuit Court forces a new, better deal, will I have a right to opt back in? Can BGE confirm this?

Nitkin: If the Assembly passes a plan now up for discussion in a special session, there will be no more opting in or opting out. Everyone will be in.

R. Wallace, Timonium: What is the origin of the idea that "stranded costs ... arean anticipated decline in value in power plants?" My understanding has been that "stranded costs are past investments a utility would reasonably expect to recover in a regulated market, but not a deregulated one." When did decline in value enter the discussion?

Nitkin: It appears that decline in value has always been part of thediscussion.

Here's a definition of "stranded costs" from a 1998 paper prepared by the Congressional Budget Office:

"Stranded costs can be defined as the decline in the value of electricity-generating assets due to restructuring of the industry. (Electric utilities also own assets for transmitting and distributing electricity, but distribution and transmission are not expected to be subject to deregulation. If they were deregulated, a similar analysis could apply.) Under deregulation, electricity prices are likely to fall more thanproduction costs, thus lowering the earnings of utilities and the value of their assets. In some cases, the quantity of electricity a utility sells may also fall as competitors enter the formerly exclusive service areas enjoyed by regulated utilities."

Back to me: Electricity prices have not dropped more than production costs, and the value of electricity generating assets have not declined in value. That's why many lawmakers now want to recoup the $528 million in stranded costs that BGE has been allowed to collect.

Kevin, Towson: Is it my imagination or did Ehrlich whack O'Malley in the chops for causing the public to pay more for electricity? Even the city's own Web page [that] calculated what people would pay under Ehrlich's plan showed a lower rate when choosing not to opt out.

Nitkin: After the city won its lawsuit, the PSC reverted to a Marchplan it previously approved that the governor and others said was lessfavorable than subsequent plans. The governor said it was O'Malley's faultfor suing to overturn a plan negotiated by the governor. Since then, theGeneral Assembly has reconvened, and a plan that is just as favorable toconsumers seems to be emerging.

Elections and politicsGloria T. Pack, Rosedale: How many candidates have filed to run for the 3rd Congressional [District] race? What are the names?

Nitkin: More than you might think. Here's the list of filed candidates so far, according to the Maryland State Board of Elections. More could file before the July 3 filing deadline.

  • Bruce Robert Altschuler (Republican)
  • A. Miles Braxton (Republican)
  • Rick Hoover (Republican)
  • Eugenia Korsak Ordynsky (Republican)
  • Scott Smith (Republican)
  • John White (Republican)
  • Mishonda Baldwin (Democrat)
  • Andy Barth (Democrat)
  • Peter Beilenson (Democrat)
  • Paula C. Hollinger (Democrat)
  • Kevin O'Keeffe (Democrat)
  • John Rea (Democrat)
  • John P. Sarbanes (Democrat)
  • Charles Curtis McPeek Sr. (Libertarian)
  • John F. Hoffert Jr. (Unaffiliated) Miles Long, Baltimore: In your June 4 article, you made it sound like Ehrlich was the problem in Annapolis. Why do you continue to ignore all of the things that Miller has done to make the governor's life difficult? Nitkin: The article addressed Miller's comments that he wanted to "bury" Republicans, but it did omit the fact that the Senate president passed the governor's slots plan -- Ehrlich's top legislative priority -- three years in a row. One would have to conclude that Miller has been at least as helpful to the governor as he has been harmful. Howard Buhl, Annapolis: David, you wrote an almost-fair-to-the-governor piece. What happened? Is anything wrong? Are you feeling OK? Keep it up and you might find an increase in subscriptions to your once-proud paper that believed in a two-party political system. Nitkin: I was feeling a little under the weather last week, but that was after the article ran in the Ideas section, not before. But I'm much better now! Pensions Bill Britton, Frostburg: Did our elected state officials get an increase in their pension? It was 68 percent, but I think it might have been increased to 78 percent. Nitkin: No, state elected officials did not get pension improvements. For full details, go to the "90 Day Report" on the General Assembly's Web site. Here's a summary description from the report: The General Assembly Compensation Commission is an independent nine-member group that is charged with making recommendations every four years for changes in salary and other compensation for members of the General Assembly. The recommendations take effect automatically, unless the General Assembly acts to reduce or reject them. The report of the compensation commission was not introduced as a joint resolution this session, but rejection of its recommendations relating to pensions and travel expenses was amended into Senate Joint 2/House Joint 1 (both passed), which also contained the report of the Governor's Salary C-24 The 90 Day Report Commission. The result is that there will be no changes in the salary or other compensation for members of the General Assembly. The General Assembly Compensation Commission had proposed no salary increases over the next four years but had recommended:
  • an increase in the retirement age of legislators from 50 to 55 for early retirement and from age 60 to 62 for normal retirement (which also would have affected retiree health benefits);
  • a slight increase in the total pension that could be earned by a legislator;
  • expanded options for designating beneficiaries of pensions and forms of retirement allowances; and
  • an increase in the district travel allowance from $500 to $600 annually. None of the Commission's recommendations will take effect, and the compensation for members of the General Assembly for the 2007 to 2010 term will remain the same as that approved for the last term.
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