Mayor Brandon Scott has confirmed that his administration is “in discussions” with BGE as a second former Baltimore mayor condemned the plan to transfer financial control of the city’s underground conduit system to the electric company.
“I am very concerned about it,” Sheila Dixon said in an interview with The Brew.
She was referring to a draft agreement that would terminate BGE’s $28 million-a-year lease payments to the city in return for a commitment to allocate the money for capital improvements – improvements to which the company will “solely” decide where and when are needed.
Dixon, who served as mayor from 2007 to 2010 and narrowly lost to Scott in the 2020 Democratic Party primary, cited voter approval last November of a change in the city’s charter to permanently block the sale or lease of the municipal conduit system.
“I mean, it was in the charter amendment! People want to keep control of this, and don’t want to turn it over to BGE,” Dixon said.
“What’s on the table goes completely in the opposite direction.”
Last week, Scott’s immediate predecessor, Bernard C. “Jack” Young, denounced the deal after it was revealed by The Brew, saying, “The whole thing stinks. There’s something really rotten here.”
Today he amplified those remarks, calling the agreement as outlined in the draft “a sweetheart deal.”
Paperwork shows that the nine-page agreement was set to go before the Board of Estimates at its February 1 or February 15 meeting.
Acting City Solicitor Ebony Thompson confirmed today that discussions with the utility are well advanced, telling The Brew that “if an agreement is reached, it will go before the BOE in February.”
The board is controlled by Scott, and the BGE agreement, once approved, would go into effect immediately, the draft specifies.
Thompson was asked about her relationship with BGE in light of her role as an associate at Venable LLC, working on behalf of BGE’s corporate parent Exelon to get approval of its merger with Pepco.
“I never performed other work with BGE after that merger, which was concluded six years before I began my work with the city,” Thompson said. “I never worked on the conduit.”
She said her predecessor, Jim Shea, who left as city solicitor on January 13, also never worked on conduits during his long tenure as the managing partner of Venable.
The Brew published the proposed agreement on Friday. The Scott administration responded late Friday with a brief statement calling the plan “fair and equitable compensation for the use of our conduit system.”
The plan would alter a century of precedent by ending semi-annual rental payments by BGE, the dominant user, in return for the company’s promise to commit its own funds to modernize the underground pipes that carry electric, streetlight, fiber-optic and telephone lines under city streets.
While the city would retain ownership of the 700-mile network, all capital improvements would be determined, financed and constructed by BGE and its contractors.
The agreement allows the city to propose improvements to the system, but says that “BGE shall determine in its sole discretion whether to pursue any specific Capital Improvement Project.”
Currently, conduit management and capital expenditures are handled by the city Department of Transportation.
Ever since conduit fees were hiked in 2015, BGE has been trying to get a better deal from the city.
At first, the utility proposed to buy the network outright for $100 million, then it filed a lawsuit, calling the new rates unfair.
The lawsuit was settled in 2016 with the city agreeing to use the expected $28 million or so collected yearly from BGE to update and expand system capacity.
In his statement, Scott said that “if these negotiations are successful, BGE will make a historic commitment of more than $100 million in capital improvements” over the next four years.
Absent from the statement is the fact that BGE would otherwise be expected to pay roughly the same in lease fees between 2023 and 2027 – and more if the Scott administration exercised its right to increase the fee.
“This is very technical,” Dixon told The Brew. “Most people probably don’t realize the benefit of controlling the conduits. They’ll miss it if it goes away.”
She said she was concerned about the effect of the draft agreement on city efforts to bring internet access to underserved Black neighborhoods.
“I didn’t see any commitment to where that would continue,” she said.
Indeed, the agreement would allow BGE to use funds to extend capacity to places like Kevin Plank’s upscale Port Covington (recently rebranded as “Baltimore Peninsula”) , while avoiding expenditures in East and West Baltimore.
Dixon said it was also troubling that the agreement would excuse the company from MBE/WBE requirements.
“Why would you take that away? We need companies to do better at complying with minority hiring and contracting – not worse.”
Henry: “Just a proposal”
Sitting with Scott on the Board of Estimates are two other elected officials – City Council President Nick Mosby and Comptroller Bill Henry.
Mosby did not respond to several requests for comment.
“I need to be shown that the amount of money is sufficient to actually cover the capital and operating needs of the conduit” – Comptroller Bill Henry.
Henry released the following statement:
“I have spoken with the administration, and they have assured me, this is just a proposal and there is no agreement yet. Before dealing with any other aspects of this, I need to be shown that the amount of money we are talking about is sufficient to actually cover the capital and operating needs of the conduit.”
While the City Council – including then-Council President Scott – voted to place before voters the amendment barring the sale or transfer of the conduit system, the body has no direct say in the current negotiations with BGE.
Cohen: “No upside”
Most City Council members did not respond to a request for comment.
The Fourth District’s Mark Conway said that, as a voter, he cast a favorable vote for the charter amendment.
Noting that it prohibits “the sale, transfer, or franchising of the city’s conduit system,” he said “any discussions to allow one of those things to take place would be news to me.”
Councilwoman Odette Ramos, noting that the Council has a hearing with BGE on unrelated issues on February 28, said, “I’ll study up on this to ask questions of them and the administration.”
“We have the ability to provide municipal WiFi, but this pretty much forecloses our opportunity to provide it” – Councilman Zeke Cohen.
Meanwhile, unlike most of his colleagues, First District Councilman Zeke Cohen made several observations on the matter.
“While I appreciate that the cost of maintaining the conduits is expensive and the maintenance is burdensome, my concern is that the voters overwhelmingly supported a charter amendment that said to not sell or in any way privatize the conduit system. The collective wisdom of the community clearly is that they do not want it.
“I’m also concerned that we have the ability to provide municipal WiFi, but this pretty much forecloses our opportunity to provide it.
“If we sold our conduits, or gave away control of them, we would lose the ability to lower fees to make it possible for groups to have WiFi that don’t have it, for us to bring connectivity to these communities that desperately need it.
“So I do not see much upside to selling or leasing it to BGE,” Cohen concluded.
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