This is what happens when Democrats are in control of a major industry and try to set prices:
A top Wall Street credit agency yesterday downgraded Pepco, Baltimore Gas and Electric Co. and Delmarva Power to close to junk status, citing their inability to pass along higher energy costs in a hostile political environment.Businesses have to pass on their costs, it's a rule of business and if that is hampered then there are consequences.
The actions by Moody's Investors Service means the utilities' borrowing costs will jump at the same time the Maryland General Assembly is pushing them deeply into debt by forcing them to finance sharply higher wholesale energy costs they cannot pass on to their customers.
Ultimately, Maryland customers or taxpayers will have to pay for both the higher energy and borrowing costs.
The political risks faced by the utilities were heightened significantly by the Democrat-controlled General Assembly's move to fire Public Service Commission members appointed by Maryland Gov. Robert L. Ehrlich, a Republican, because they originally approved a rate plan that would have allowed a quicker pass-through of energy costs to customers, the agency said.
Moody's called the mass firings, which have been temporarily stayed by a Maryland appeals court, "a highly unusual event in the modern history of the U.S. regulated utility industry" that bodes ill for all Maryland utilities faced with escalating energy costs.
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A "junk" designation means the utilities' bonds are speculative and pension funds and mutual funds cannot invest in them. That makes it harder for the utilities to borrow and drives up the interest rates they must pay to attract buyers.
