NewsNight Maryland; 126

The The proposed BGE Pepco merger is called off, but at what cost? And the man who heads up the richest county in the state on the future of Montgomery County. This is Newsnight Maryland with Bob Wolfin and Camilla Carr. Good evening everyone, a big announcement today from both sides involved in a major merger. BGE and Pepco say they will not form a united front after state and district regulators

raised concerns. On tonight's edition of Newsnight Maryland, what happened to the plans and how much money was virtually wasted on the idea and what will happen next? And we'll talk with the leader of Montgomery County, Doug Duncan. He's here to tell us his wish list for the upcoming legislative session and maybe to talk about his own political aspirations. And right now it's time to check in with Newsnight's Jeff Salkon for a look at newsmaking headlines around the state and in the district tonight, Jeff. Good evening, Camilla. Thousands of Maryland seniors may soon be paying for their free health care coverage. Blue Cross and Blue Shield of Maryland is asking federal permission to charge $75 a month to seniors in its Medicare first HMO in 16 Maryland counties. Now the trouble is the seniors all signed up for this plan because it was free and now the insurer says it is losing money in those counties, which are all of Maryland except for Howard, Harford, Montgomery, and Arondale Carroll, Baltimore counties, and Baltimore City. Drew Visfini, the former prosecutor and former state senator, will be taking charge of

the Larry Young investigation. Young is the Baltimore state senator who's accused of engaging in improper and unreported personal business dealings. Senate leaders are hoping to have the investigation wrapped up before the legislature convenes in about three weeks. Fin eight named as the Ethics Committee's independent counsel today says he's not sure that can be done. Other headlines around the state tonight, Baltimore has been chosen for a test of a new anti-drug advertising effort. The federal campaign is aimed at keeping kids ages 9 to 17 from using the most easily obtained drugs. How about a night class at the University of Phoenix? Too far to commute? Well, maybe not. Washington's largest for-profit university wants to set up a Maryland campus that must be approved by the state's Higher Education Commission. And keep an eye on your cell phone. Police say hundreds of months are being stolen from parked cars in Maryland. Thieves can get a quick $10 or $20 for the portable phones. So police say you should not leave them in plain view.

Those are the news headlines tonight. Camilla will be updating these stories and others through the evening on MPT. OK. Thanks a lot, Jeff. Well, the word came down this morning. Constellation Energy Company will never exist. Baltimore gas and electric and PEPCO announced their calling-off plans to merge, plans to create the nation's ninth largest energy company. We'll be talking with an industry analyst about what all this means. But first, this report from Senior Correspondent John Abishan. The companies have spent more than two years and a staggering $100 million in this aborted marriage bid. The combined Constellation Energy Company would have had more than a billion dollars in assets and 3.4 million customers in Maryland and the district. They went into their courtship with an eye on an uncertain future. Power companies from all over competing for your business. As Maryland prepares to join 13 other states in allowing open competition and selling electricity.

A larger, stronger utility has more chance of surviving in the tumult of the competitive marketplace than a smaller utility. That could be especially important in cost-cutting if and when, say, the big Houston-based Enron Corporation wants to become the energy supplier for one of your best customers like Beth Steele. The merger seemed to us to be the best way to get the biggest bang for the bucks in cost reduction, but it was on cost savings that the merger hit the rocks. The companies say the commission's order would have given customers more than the total savings the deal would have created. So a merger actually would have cost shareholders money up front. The companies have been appealing the orders but decided, A, they might not win and B, they couldn't let this drag on and on because they need to focus right away on the rules. Maryland is about to set up for electric industry competition. There are some major battles looming in that arena. I'm John Obashon, Newsnight Maryland.

And joining us tonight to discuss the cancellation of the merger. Is industry analyst Ron Tanner from Wood Walker Leg Mason? Before we get into what this means, can you just give us a brief background? They have been working on this merger for what? Two years? Oh, Camilla, I think it's been a little longer. It was about September of 1995, which would be just over 25 months now. At a cost of $100 million. Well, they've announced that they're probably going to each have to write off about $50 million in the fourth quarter because of expenses. Well, okay, a lot of people out there are still wondering though, are they going to, will they be able to pass this over to consumers? Well, let me first say that $100 million may sound like a lot of money. And it is a lot of money to you and I. But these companies are very large and to spend $100 million to get over a billion to a billion and a half in savings over a 10-year period, it is an investment that anybody would make.

You'd spend $100 million to get a billion and a half of savings over 10 years. It's unfortunate that the merger didn't go through and they won't be able to recoup those expenses out of the savings that we're going to be achieved. But that's a cost of doing business. Were you surprised by this news? If we go back two years to when the merger was originally announced, I had a sign to high probability that this merger would get done. The companies are interconnected, they're located close to each other, they both have operations in Maryland. But after the Maryland Commission issued their decision on the merger and later the DC Commission and I saw the conditions that were imposed, I knew that was a very tough hurdle for the companies to get over. Because essentially what the commissions did was the savings that were there and the companies wanted to split those between the customers and the investors, the regulatory commissions said that all those savings and a little bit more in one case would go to the customers.

And that's just not a good business decision to go ahead with the merger that's not in the investor's interest. What is this going to mean for consumers down the road though? That's a good question. Consumers initially will not get the savings that they otherwise would have had had the merger gone through. Longer term I think that this industry is undergoing tremendous consolidation and although this merger didn't get done, I think there are other mergers that will get done involving these two companies. Involving these two companies. It's very difficult to predict who's going to merge with who but I would think there's a high probability that these two companies could merge and those two companies could merge again until we get some super big utilities across the country that can really compete. In fact, you were just telling me there was a big merger announced today. Yes, American Electric Power in Ohio and Central and Southwest headquartered in Dallas, Texas announced a merger.

That merger by far will be much, much bigger than the BG&E Pepkill merger. So I guess what you're saying, yes, this merger is off but the future of mergers is still alive and well and it's going to happen. Right and the industry is becoming more competitive and on a state-by-state basis regulatory commissions are implementing choice so that customers have choice. The way you get competitive is by combining companies together, you can achieve tremendous savings and we have over a hundred utilities in the industry and if you look at other industries, the telephone and airlines by combining companies together and getting very large companies, they actually can compete better and give the customers much better deals and better products to choose from. Ron, thank you very much for joining us. And straight ahead, the latest on issues affecting those who live in the wealthiest county in the state of Maryland will be right back. Experience the county and the motion of the Emmy Award-winning MPT production of the Morgan

White at 10 Wednesday night. In general, Class either Domingo and Madeline Cole combine in a performance of classic Christmas songs and spiritual melodies, staged at the Ospreya Center in Dina, join us for a celebration of Christmas, then at 9.30. Kathwee and Bathroom, Frederica Fungstein, Wynton Marsalis and Andre Prennan in a Carnegie Hall Christmas concert on great performances. A festive night of music and cheer Tuesday beginning at 8 on MPT. One boy speaks out against violence and unites a community, Harambe, a family special for fun on MPT Friday at night.

The Maryland General Assembly opens its 1998 session in just over three weeks, and as usual, many of the biggest disputes in Annapolis will be about money. The state is sitting on a big surplus and everyone wants to have a say on how it's divided. With us tonight, Montgomery County Executive Doug Duncan, who's been the leading man in

an effort to make sure that the state's suburban jurisdictions, especially the Washington suburbs, get their fair share. Here's a background now from Senior Correspondent John Obechon. He spent so much time in Annapolis during the General Assembly's 90-day session that the Montgomery County Executive has been dubbed Delegate Duncan. He is inexhaustible in courting state dollars, and that's where Doug Duncan first formed his new alliance in Annapolis last year when Prince George's County Executive Wayne Curry and Duncan insisted that a Baltimore city got a big influx of state school aid their children deserved extra help too. Montgomery County has half of the state's results, over 25,000 children on pre-reduced news, a student population that's growing by the 3,000 students per year. But, Montgomery and Prince George's tried to hours their combined clout to pressure the governor and legislature to find more money to hand out.

Well, they got more, but not enough to satisfy them. When the votes were taken, most lawmakers from the Washington suburbs did not sign on to the deer. Barbara Hoffman, the Baltimore Senator who chairs the budget committee, says the episode cost Duncan and Curry some important potential friends and allies. Generally, you fight really hard for your subdivision, and you get as much as you can, and that's the way the game is played. But then you need to vote on the merits of the legislation. To have Montgomery County and Prince George's county maintain their posture of opposition. I felt was damaging to them. But since that battle, Duncan has cemented his alliance with Curry, even joining in local projects such as parallel gun safety laws on the two counties, at a joint police ballistics lab. But he also decided that the school money fight last year proved his words, but Montgomery and Prince George's can't do it alone. So he's worked relentlessly to expand

their alliance, to include Howard and Arundal, Frederick, Charles, Calvert, and St. Mary's counties. Together he says they are by far the largest economic and political region in Maryland, and should flex their muscles in an app. Senate President Mike Miller of Prince George and is skeptical, there's only so much money Miller believes, and they should get what they're entitled to regardless of arm twisting, but it is not Duncan's style to sit still and let things come to him. Let's go talk about things. Let's get them done. That's how we solve problems here. Duncan, former mayor of Rockville, often points out that Montgomery County has replaced Baltimore City as Maryland's largest jurisdiction. He thinks that should be reflected in what Annapolis does. In fact, while he won't talk about it, many believe Duncan wants to move to Annapolis four years from now to start making some of the decisions himself as governor. I'm John Albuschon, news night, Maryland. We're joined now by county executive Duncan and by my colleague John Albuschon to discuss

what's in the cards from Montgomery County. We were talking about the big news a moment ago about the failure of the merger between BGE and PEPCO. Is this more than a simple failure of a merger for- Well, I think it's harmful to the state in the long run. If you look at these two companies coming together, it's sort of the trend we're seeing across the country. But what excited me about PEPCO and BGE and emerging was sort of a combining of two of the biggest businesses in the state of Maryland and a combining of two separate regions of the state. I mean, we're talking about trying to make one Maryland bringing PEPCO and BGE together meant that the BGE representatives were now going to care about Montgomery and Prince George's counties and vice versa for PEPCO. There's real potential there to start bringing people from the state altogether. Is this bucks a national trend toward consolidation? Well, we're seeing that across the board. And, you know, who knows what will happen in the future, but it was sort of disappointing to hear that was happening. Because I think there was a lot more good than just emerging these two companies. There's

a lot of political good and sort of good for the entire state that was going to come out of this. You know, next month the Montgomery County Council holds a public hearing on the proposed development policy called pay and go. And what is exactly does pay and go do? And how does it accomplish that? Well, it allows certain development projects to proceed if you pay a set fee for the type of development that you're proposing. And the problem we had in the county is we sort of regulate our growth through what's called our annual growth policy regulations or the adequate public facilities ordinance. And the problem I've had is that those regulations that ordinance are broken now, they've been tinkered with over a number of years and they just don't make sense. They're, they tell me that in downtown so we're spraying, we're almost at a state of moratorium because there's so many jobs there. They're counting vacant buildings as fully occupied. Their county development has been approved and up and built is already built. So we've got to fix those regulations. Now, Pango, was it sort of a four year temporary fix to get around that problem while we fix the full regulations?

Not everyone's happy with it. No, there's a lot of concern about it. I've got some concerns about it myself. I've sent amendments to the county council that I'd asked them to pass when they considered a law they didn't and I've sent them back now after signing the bill saying that we should exclude residential that had already been approved from reapplying under this new policy. And I've said we're taking a close look at the fees that have been set to see if they're the right fees and sometimes the summer will probably be a recommendation to make some changes. I guess that's my next question. Will Pango cover the infrastructure costs? Well, it's going to cover some of the costs. The real question is is it going to cover what the fair share of new growth should cover? And that's what we'll know after we get some experience in a couple of months when we get some people applying under it. We take a look at it. Development policy also appears to be at the core of a key transportation decision. The county has grappled with for years now the inter-county connector. You have a large core of essentially, I suppose, anti-growth residents up county who don't want it built

in their backyard. And yet you think it should be built somewhere for the good of the county. Well, we need to have better east-west transportation capacity in Montgomery County in the up county. I mean, it's very difficult to get back and forth. The 270 quarter, which is the main growth quarter for Montgomery County and for the state of Maryland, is in danger of sort of being cut off and isolated if we can't get back and forth to the Baltimore region, if we can't get people and employees and goods to that quarter. What I've said is the state has undertaken this four or five-year federally mandated study. They spent millions of dollars in the study. They are about to conclude the study. They've got about a year left. Maybe I'd think two or about two alternatives that they're still looking at that they need to finish studying. I said, let's finish the study, let's see what the study comes back with and see what can be built if anything and make a decision at that point. At this point, it doesn't appear that the county council is with you and yet the polls

say 70% of county residents support the project. I believe that the most county residents support a project of some sort to improve the congestion that we have in the county. The county council has said, finish the study also. They said, just study one alternative and get rid of everything else. They can't. The state can't do that under federal law. I'm hopeful that the governor will announce soon that he's going to finish the study, take the next year to look at those remaining issues and then come out with those findings and then some kind of recommendation sometime in 1999. A lot of people are already saying it's dead though. ICC is a dead issue. I don't think it is. I think that they've come so far we need to get to a decision point and it'd be a shame for the state to say we're just going to drop everything now. It's only one more year and a five year five turned out to be a six year process. Let's finish it and then let's make a decision in 99 of what we can do with anything. For county executives and governors and legislators were at the beginning of budget cycle. We're looking ahead to how much money we're going to spend next year on what? What do

you want to spend the most money on next year and how much of what you want to do depends on what the state can provide? We're going to spend the most money in Montgomery County on schools. We spend about a billion dollars a year on our public school system. 80% of that comes from the local taxpayer. Only 13% comes from the state of Maryland. We are supporting our school system by far, I think, more than any other county in the state. That's where the book of money is coming. What we're asking the state for is to increase, and this isn't just from Montgomery County, but increase statewide, the funding for school construction from 150 to 200 million dollars to fund. I'm very supportive of the Nancy Gradsmick, Jean Cunahan Task Force plan to address the needs of address children in the state of Maryland, but another 50 million dollars statewide for operating costs. I'm working very hard to help make both those things happen. I was very pleased to hear the governors say that he's going to put 200 million in for school

construction and other 50 million. It didn't define where it was going to go or how we distributed, but put another 50 million in for school operating funds. I'm wondering if some people in on the Apple is going to say, sure, the state of Maryland has got a surplus, but so does Montgomery County. Why don't you put more Montgomery County? Well, we are putting more Montgomery County money. Last year we got maybe 10 million more in state funds. We put in another roughly 30 million more in local funds. This year it'll be about the same. We're going to put in quite a bit more. We go beyond the maintenance of effort, the requirements of the state sets for local governments to spend money for schools. We've gone beyond that and given more than that. And in fact, the big seven county executive signing on to this Gradsmick plan from the State Board of Education kind of avoided a knockdown drag out fight. We'll find out when we see what the governor puts in his budget, but I'm hopeful it will. That's sort of how

we left the last session. We weren't some of us weren't satisfied with the state response or the fairness of treatment across the state of Maryland. And I'm very hopeful that the governor will put this in the budget. I want to thank Kim and the Speaker and Nancy Gradsmick for their work in crafting something that has gotten the support announced. But in that same vein, the grand alliance of suburban jurisdictions that you have taken a leadership role in putting together, what is that going to accomplish in this coming session? Well, if we're able to get more school construction funding, that benefits, I think everyone in the state of Maryland. So it's not just people in the capital region, but it's people throughout their counties, throughout the state of Maryland. So if there's more school construction dollar and more operating dollars, that helps everybody, it helps the counties in Southern Maryland in Frederick, Montgomery, certainly in Prince George. There are people, though, in Annapolis, who say, this is simply a way to get the political power away from its traditional spot, which was Baltimore, and bring it down to the national. Well, I know this is created some nervousness in the Baltimore region, but I think what

I'm trying to say is we're not against anyone. All we're saying is we want a fair share. We want a fair share that state tax dollars that we give to Annapolis every year, and we're looking for ways to help bring some dollars. We're the growth region in the state. If you look at school kids, you look at jobs. I mean, that's where the needs in the state are now to help keep the state economy flowing. So if we can get the school construction dollars we need, if we can get the roads, we need the transit, we need. If we can get some economic development assistance, that's going to help us do even better, which in effect makes the whole state of Maryland anything better. I'm sure you would say that you want to avoid a battle of the beltways. But with finite dollars, it could come down to that. Well, but if you look at what they proposed this year for the school operating funds, for example, the Nancy Grassmick Plan, I think that's something that is very fair statewide. It's educationally sound, and it's something that we all have signed off at least the big seven to sign off on and it makes a lot of sense. That's the kind of

cooperation I'm talking about. We don't come in and say, well, here's, here's exiles for this jurisdiction for this problem, but everybody else who has the same problem or similar problems, you don't get anything. I mean, I don't think that's the way to run a state and we need to bring people together. And I think by some of, some of the counties in our part of the state standing up and saying, here's our needs, you know, how do we address these needs and how does the state help us? I think it only only strengthens the entire state. How do you want the state to help Montgomery County in terms of the gridlock, the in and out north and south traffic problems? Well, one, making a decision on, on the Intercadic Connector, but, but two, the state did this three years ago. I mean, this is something that, that I pushed very hard on. We got the state highway user formula, the state aid to local governments for local roads was changed. Some, again, benefited every county in the state of Maryland city of Baltimore is held harmless in terms of the ebony changes. And we're, over 10 years, we'll have 55 million more dollars from this change in this formula to help with our infrastructure of our roads or the maintenance of our roads to help build new roads in the county. So that's the kind of thing that's already been done that we're

starting to see the dollars come in on it. And we need now to start a local roads program, which I'm going to announce in a couple of weeks or in a month with my capital improvements problem. This will prioritize roads that need to be. Well, it's going to, it's going to start a local roads program again. It really had stopped in the county. I tried to put in, two years ago, try to put in some construction funding for some new roads in the county, some county roads. And the council gave me planning money, but took out the construction money. So I'm going to be back again saying we've got congestion problems. And, and yes, we're going to do more with, with Metro and, and Metro bus and ride on bus and transit in the county, but we still need to build roads, particularly up can. Maybe we can, maybe we can we'll invite you to make a little news tonight. Tell, tell us, tell us one road that you're, you want to build that people don't know about yet. Well, I'm going to have an announcement about three weeks. So there, there are, we've got a lot of planning that's gone on. And, and I hope to have a series of new roads that will be in that six year construction program. Let's shift the folks a little bit from an app list back to Rockville. And I noticed recently that there has been some discussion about whether or not the county police should continue to maintain the task force it does

that goes in and breaks up teen drinking parties. Do you feel that that's a good use of police man? Well, this, it's called the alcohol enforcement unit. And this unit has been very effective in what they've done. We take very seriously underage drinking in our county and enforce it very strictly. So they've done a good job. The, the chief, I think, was responding to a need. What's happening is we're seeing officers retire more quickly than, or at a higher number than we had projected. We're having difficulties hiring new officers. There's competition among the district and Prince George's and Fairfax and, and a lot of police departments are looking for to add police officers in us. There's a lot of competition there. So we have been able to hire as many officers as quickly as we wanted. So we've got a shortage now in patrol officers. So the chief was looking at reassigning some people who are on sort of temporary assignment in special details back to patrol. And, and I'm working with her on that. I'm still looking at the, the alcohol issue. My concern is that they've done such a good job in terms of

of their enforcement. And I'm still waiting to see some kind of guarantee that if we decentralize that, you know, put them back into the districts that they'll be able to keep the, police department able to keep the same level enforcement. And that's the chief is supposed to get something to me in the next couple weeks on that. The district may have, on its ballot, a proposal to legalize marijuana for medical uses. Now, I'm not necessarily asking you to comment on whether or not that's a good thing for DC. But what effect should, if it were to pass, would it have on Montgomery County and what would you think of it? Well, I would have some problems with it. I mean, I know in California and, and one other state, they did some of that. I just in terms of the loopholes that that creates. I have some very serious concerns with it. It is still something that I think our drug laws need to be enforced. I'm not an advocate of, of legalizing drugs in this, in this country. And I'd have to see how this was worded and what they did. I mean, I haven't

seen the details. I don't see how it's worded. But on the face of it, I'd have some problems with it. Again, because of some loopholes that that other states have looked at. We're just about out of time. Let me throw one more question in. The politic answer is I'm focusing on being county executive. But do you want to be governor someday? I want to get reelected can executive in 1998. That's all I'm looking at. That's all I might consider it. What running for reelection is county executive? No, I've learned that you take one race at a time. And if you do a good job in what you've elected to do, then the future takes care of itself. And, and I've never liked politicians who've got elected to something. And, and before they serve today on that office, are you running for another office? Thank you. Thank you very much. That's it for this edition of News Night Maryland. Join us tomorrow night when we discuss the rekindled debate over Jewish identity in Israel and America. For Camilla Carr and myself, thanks for watching. Have a good night.