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Gouged by Baltimore energy companies

September 7, 2007 | Page 6

WORKING PEOPLE in Baltimore are facing a crisis. Thousands are unable to afford to pay their electric bill after a 50 percent increase in electricity rates for Baltimore Gas and Electric (BGE) customers went into effect on June 1.

The rate hike, which was approved by Maryland's newly appointed five-member Public Service Commission on May 23, affects 1.1 million people, including over 277,000 in Baltimore City.

The rate increase is a result of deregulation in 1999 that led to price caps, which expired last summer. BGE then proposed a rate increase of 72 percent so that Marylanders would start paying the "market rate," causing public outcry. As a "compromise," rates were raised 15 percent instead of 72 percent, and the people of Baltimore were expected to find "relief" in this lesser price increase. However, some argued that the already too-high prices should be reduced rather than raised.

In an Enron-like scandal, it was discovered that BGE was buying at least 70 percent of its energy from its parent company, Constellation Energy, effectively purchasing energy from itself and fixing the market rate. While BGE cried that they were losing money because the cost of energy had gone up while the price caps kept them from raising their prices in proportion to the costs, Constellation's profits soared. They made more money than ever, in spite of last year's rather warm winter in Maryland.

Furthermore, Constellation/BGE has been charging consumers for a predicted decline in the value of nuclear reactors, when in fact those reactors have actually increased in value. Consumers paid half a billion dollars to Constellation/BGE to compensate them for the expected drop in value of older coal-fired and nuclear plants, but instead those plants appreciated in value to about $4 billion. They are keeping that profit while increasing consumer costs by 15 percent last year and another 50 percent this year.

Needless to say, people are angry. The day after the 50 percent rate increase was passed, the Maryland Coalition to Stop the BGE Rate Hike protested outside of Constellation Energy in downtown Baltimore. There were about 50 demonstrators at the height of the protest, with an estimated 75 to 100 participants over the course of the event.

Delegate Jill Carter and NAACP President Marvin Cheatham spoke out against the increase, calling for Gov. Martin O'Malley to hold a special session of the General Assembly to come up with an immediate solution, such as ordering re-regulation.

Many feel that Gov. O'Malley has not lived up to the promises he made when the 72 percent rate increase was a hot issue during the gubernatorial election last year. He promised to take the side of working people, but he also accepted campaign contributions in the tens of thousands of dollars from Constellation Energy. In May, after his own Public Service Committee approved the 50 percent increase, O'Malley said he was "deeply disappointed that we could not do better."

At the protest, Carter also asked Mayor Sheila Dixon to fund a study to examine the possibility of creating a publicly owned electric utility. Mayor Dixon responded that money has been set aside for that purpose.

City Councilwoman Belinda Conaway talked about a bill she plans to introduce requiring BGE to notify city housing and fire departments before shutting off electricity in homes for unpaid bills so that smoke detectors could be installed in those homes. She said she is concerned that residents will seek energy alternatives that lead to fires, causing deaths. She said, "Unless drastic measures are taken, we will be burying children. BGE and the Public Service Commission couldn't do more harm to our communities if they planted roadside bombs."

People are furious and are conscious that this is an attack on working people as a class. The day before the rate increase was approved, a deadly fire in a poor neighborhood killed six people, including children, and injured seven.

Afterward, people at the bus stop near where the fire happened were making connections between the BGE rate hike and the potential for more "accidental" deaths in their communities. They were outraged that Constellation Energy CEOs are getting richer while the lives of the poor and Black are deemed expendable.

Baltimore residents are also drawing conclusions about the real cause of crime in their neighborhoods, saying that these huge increases in utility bills are going to worsen poverty, leading to more crime. Many have even said that they believe gas and electricity should be basic human rights for everyone.

Nobody is buying the rhetoric about having to catch up to pay "market rates." The laws of supply and demand are proven wrong when demand remains unchanged, but fewer and fewer people can afford to be supplied.

The real crime is that the energy companies are allowed to steal this basic necessity from regular working people while the CEO of Constellation Energy, Mayo Shattuck III, made over $20 million in salary, bonuses and stock option awards last year.
Alana Smith, Baltimore

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