Declining Prices for Wholesale Power, Natural Gas to Provide Measure of Relief for Baltimore Gas and Electric Customers
January 19 2007 - 5:08PM
PR Newswire (US)
Proposed rate plan to give customers option of paying full increase
or two installments of approximately 20 percent BALTIMORE, Jan. 19
/PRNewswire-FirstCall/ -- Baltimore Gas and Electric (BGE) today
announced that declining wholesale electricity and natural gas
prices will reduce the amount of a pending 2007 residential
electric rate increase. "After an extended period of record prices
in 2005-2006, today's preliminary projections of power costs from
the Staff of the Maryland Public Service Commission (PSC) provide a
welcome measure of relief for our residential electric customers,"
said Kenneth W. DeFontes Jr., president and chief executive officer
of BGE. "The effects of the global energy crisis still linger,
however, and after 13 years of reduced and capped rates, power
prices will still rise to reflect today's market levels." BGE is
taking proactive steps to propose to the PSC a plan that would
provide options for customers as they transition to market rates. A
rate plan was mandated in Senate Bill 1 (SB1), the electric rate
legislation adopted by the General Assembly in June 2006. The
company will file next week with the PSC a proposal that would
allow customers, at their option, to transition directly to market
rates on June 1, 2007, or delay the move to full market rates until
Jan. 1, 2008. Under this option, customers would pay approximately
half of the increase June 1, 2007, and the remainder Jan. 1, 2008.
The installments are expected to be approximately 20 percent each,
depending on actual power costs. "The recent downward trend in
wholesale natural gas and electricity prices is encouraging news
and means the electricity increase will be lower than anticipated
last year," DeFontes said. "The additional good news is that
electric bills are down 7 percent on average thus far this winter
because of the mild weather, and the benefits are even greater for
BGE's natural gas customers, with average bills down 20 percent, or
approximately $150, over last winter. "The experience of other
utilities in the region strongly suggests that most of our
customers will opt to pay the full 2007 increase and transition to
market rates in a single step on June 1, but we recognize this may
not be the best option for all," said DeFontes. "We will propose to
the PSC a fair and equitable rate plan with either a direct
transition to market rates or a two-step installment plan for those
customers who need additional flexibility." The precise amount of
the 2007 residential electric rate increase will not be determined
until BGE completes wholesale power auctions in mid-February and
publishes retail rates in early March. The Staff of the PSC today
projected an increase of approximately 47 percent. Even with a
projected 2007 increase at that level, BGE's rates will remain on
par with, or lower than, utilities across the Mid-Atlantic and
Northeast, including other Maryland utilities such as Pepco. "Our
customers, and many like them across America, were subjected to a
series of unprecedented events last year that led to dramatic
increases in energy prices," said DeFontes. "The subsequent fallout
harmed our company as well, and the deferral of the 2006 rate
increase weakened the utility financially and led to a series of
downgrades for BGE's credit rating. "The start to this year is much
more promising, and when BGE's rates adjust to market levels by
June 1, 2007, they will be in line with, or lower than, those paid
by utility customers across the Mid-Atlantic and Northeast,"
DeFontes said. "We think having a period of stability that includes
establishment by the PSC of an acceptable rate plan will help with
the restoration of our historically strong credit rating." DeFontes
added that BGE is working on several fronts to keep electricity
prices down and identify new ways to help customers better manage
rising energy costs. He pledged to keep customers updated about the
pending increase and conservation measures through a series of
advertisements and customer notifications. "To help keep prices
down, we are buying electricity as efficiently as possible,
staggering our purchases over longer periods of time," DeFontes
said. "We are also planning to introduce a number of energy-saving
technologies and programs that will help drive costs and energy use
down. "Maryland law provides customers the option to shop for the
lowest price from competitive retail providers and we strongly
recommend they do so," he said. "Customers can shop and compare
offers from various electricity suppliers and select the one that
works best for their needs. "Lastly, our customers can take
advantage of our budget billing program to help spread out costs
and can reduce energy usage by following a few simple conservation
measures we outline on BGE.com," DeFontes said. DeFontes also noted
that low-income customers may contact the State of Maryland's
Office of Home Energy Programs to avail themselves of a variety of
energy assistance programs. BGE is a member of Constellation Energy
(NYSE:CEG) (http://www.constellation.com/), a FORTUNE 200 company,
the nation's largest competitive supplier of electricity to large
commercial and industrial customers and the nation's largest
wholesale power seller. Constellation Energy also manages fuels and
energy services on behalf of energy intensive industries and
utilities. It owns a diversified fleet of 78 generating units
located throughout the United States, totaling approximately 8,700
megawatts of generating capacity. The company delivers electricity
and natural gas through the Baltimore Gas and Electric Company
(BGE), its regulated utility in Central Maryland. DATASOURCE:
Baltimore Gas and Electric; Constellation Energy CONTACT: Robert L.
Gould for Baltimore Gas and Electric and Constellation Energy,
+1-410-470-7433 Web site: http://www.constellation.com/
http://www.bge.com/ Company News On-Call:
http://www.prnewswire.com/comp/084087.html
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