How deal on energy died in last hours

Just two hours remained before one of the Maryland General Assembly's most frenetic finishes, and in the Senate lounge Sen. Thomas M. Middleton was pleading with his exhausted Finance Committee colleagues: Accept a plan to stagger a 72 percent rate increase for more than a million Marylanders or return home with nothing.

But there, in the stifling lounge, the plan began to crumble.

Anxious lawmakers recalled their 1999 vote over deregulation - now a nightmare to many - and worried that they might be about to make a similar mistake.

"We are in trouble now because of what we did then," said Sen. Delores G. Kelley, a Baltimore County Democrat, who has become known for her biting remarks toward Constellation Energy in recent weeks. "I just think this whole thing is ridiculous. We are just going along with what they are telling us. I want to know, how does this put us in a better place than we are now?"

It was the turning point in a day full of back-door brokering with Constellation executives, who offered $600 million over 10 years to blunt the rate increase for Baltimore Gas and Electric customers. Lawmakers would allow the governor to keep the current Public Service Commission for another year and customers would be hit with incremental increases until January 2008, when market-rate prices would kick in. And the plan would allow more low-income ratepayers to qualify for a program that helps them pay for utilities.

But it would have required legislators to effectively endorse the pending merger between Constellation Energy and FPL Group, Inc. of Florida, something many wouldn't accept.

And it would have required them to vote immediately. With the clock ticking inexorably toward midnight, when the session would expire, every minute began to work against the deal.

Twelve hours earlier, the time crunch seemed to be pointing toward a resolution. It is an old tactic in the General Assembly to hold controversial issues to the last day, when mounting pressure gives birth to compromise. That morning, when Constellation executives arrived for a meeting with Gov. Robert L. Ehrlich Jr., Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch in the governor's reception room, ready to put $600 million on the table - four times Constellation's original offer - the strategy looked as if it was working again.

Ehrlich bounded out of the meeting about 8:45 a.m. proclaiming himself "very cautiously optimistic. Extremely cautiously optimistic, if that's grammatically correct."

Busch got a mostly positive reaction when he reported the deal to the Democratic caucus that afternoon in the House office building. "Ultimately, it is what the best deal is for the ratepayers," he said.

But things were different in the Senate, where Miller encountered legislators who had grown more skeptical as the session dragged on.

The morning meeting, said Middleton, was pure mayhem. Critics such as Sen. E.J. Pipkin, an Eastern Shore Republican, and Sen. George W. Della Jr., a Baltimore Democrat, questioned why the legislature appeared to be giving up on overriding Ehrlich's vetoes of bills that would reconstitute the PSC and give the legislature power over the Constellation merger.

"A lot of it came down to the real politics of the thing: How do I sell this?" recalled Middleton, who had a front seat in the negotiations as chairman of the Finance Committee. "We kept going and going, and finally, Mike said, 'We're going to go with the bill.'"

By late afternoon, communication had broken down. Miller did not attend a scheduled 4 p.m. meeting, and instead continued to preside over the Senate. At one point, Busch took a seat in the second- floor gallery and watched Miller preside over debate. Miller glanced up and gave him a nod of acknowledgment.

Around then, pessimism - and talk of a possible special legislative session - started to creep through the State House.

"It was my understanding at that point the Senate felt there were no more reasons to continue meeting," recalled Del. Dereck E. Davis, a Prince George's County Democrat who is chairman of the House Economic Matters Committee.

With Senate opposition to the plan growing about 9 p.m., House lawmakers began crafting another version of the bill.

By 10 p.m., when Middleton called his committee meeting in the Senate lounge, dissent was raging. At first Middleton instructed Senate staffers to keep the lounge doors closed. But a few minutes later, they were opened after a handful of reporters objected, saying shutting them out was a violation of the state's open- meetings laws.

Pipkin, a former stockbroker who has emerged as one of the Assembly's leading voices on electricity issues, objected to the plan's being contingent upon the $11.4 billion merger between Constellation and FPL. Pipkin peppered a committee staffer with questions as he marked up pages of the bill with ink.

With each time-consuming question, Middleton grew impatient, barely touching platters of fruit and vegetables on a coffee table. Across the hall, senators were passing a flurry of last-minute legislation. Reporters gathered behind the red leather sofas, scribbling while photographers converged on the scene."So let me get this straight, if this passes tonight, we are approving a merger for all practical purposes," Pipkin snapped. "Because if we blow it up, this whole plan goes away. There's nothing in here you can't get from a consumer-friendly PSC."

Middleton responded that the measure offered manageable rates for the next two years. Without it, he warned, aid to consumers could not be guaranteed.

Some lawmakers complained they didn't have time to thoroughly consider the 11th-hour plan, while others charged it was blatantly unfair to customers.

"I want this legislation to work, but I can't take this bill home," said Sen. Lisa A. Gladden, a Baltimore Democrat. "This 72 percent never goes away. There are additional charges that don't go away. I can't do that. I want to take home a bill that said I tried."

Amid the fiery debate, Ehrlich's chief of staff, James C. "Chip" DiPaula Jr., appeared in the committee room. He picked up where Middleton left off, answering questions about the bill, and maintaining that it was the Assembly's only choice.

"The most important consideration is that this is our best option," he said.

After the meeting, it looked as if the bill wouldn't get enough votes for a favorable committee report, essentially dooming it to defeat. The Finance Committee members filed back into the Senate chamber and took their seats, resuming the mundane work of moving dozens of bills through to final approval.

While senators introduced measures on the floor, Miller and Middleton huddled at the side of the podium to count votes. At Miller's urging, a couple of skeptics on the committee agreed to vote for the favorable report. At 11 p.m., the bill was headed to the Senate floor.

"When you have to fall in love with something, you fall in love," Middleton said on his way back to the Senate floor.

It took time for the bills to be printed. When they arrived, it was 11:40. More minutes ticked by as Middleton read a summary of the bill. He was greeted with a chorus of opposition.

"This will be a back-door approval to this merger, and I say we will rue the day we shackled ourselves to FPL," Green said.

About that time, the House approved its version overwhelmingly in a vote of 129-8.

Miller called for the first of two mandatory votes and got 26 yes votes, two more than the bill would need to pass. But Senate rules required a procedural vote to allow immediate final passage, and that fell one vote short.

Miller returned to the other business of the Senate, speed- reading bills to get votes recorded before the confetti that traditionally marks the end of session dropped. But the punch was already taken out of the session's usually jubilant final moments.

"It's a very complex bill, and we needed to spend some time on it," Miller said. "We'll be back, and we'll work on it again. I hope BGE and Constellation don't give up on us."

Busch, whose chamber had stood at the ready to pass the compromise, was much less sanguine. At 1 a.m., he walked into the press room in the basement of the State House, exuding anger, frustration and exhaustion.

"I do not know what people were thinking that voted against this," Busch said. "The people expected us, Senate and House, Democrat and Republican, to solve a problem. Solve a problem.... And now they have to go home and tell their constituents they get the 72 percent."