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Key Senate Committee Approves Utility Re-Regulation

Legislation backed by Gov. Martin O'Malley (D) to partially re-regulate the production of electricity in Maryland is headed to the Senate floor.

The Senate Finance Committee approved the bill last night after several marathon work sessions. It would give the Public Service Commission authority to direct utility companies to build new power plants where and when they are needed. Those plants would be regulated, meaning the price their owners charge for electricity would be capped.

The bill, whose lead sponsor is committee Chairman Thomas Middleton (D-Charles) exempts large commercial and industrial customers, which have had success shopping for power from competitive suppliers. A third nuclear reactor that Constellation Energy hopes to build at its Calvert Cliffs plant also would not be regulated.

The move to re-regulate has been debated in Annapolis for several years, since rate caps were lifted. Customers of Baltimore Gas & Electric were hit with a 72 percent rate hike, and their bills have continued to rise. Pepco customers also are paying much more than they did under a regulated system. Competitors to the large utilities have only a tiny slice of the residential market.

High prices have been a political problem for O'Malley and lawmakers. Adding to the problem, gas and electric bills across the state skyrocketed this winter, owing to relatively cold weather, longer billing cycles and locked-in contracts for power signed by utilities when prices peaked last year.

The re-regulation bill is unlikely to effect electricity rates in the short term, since it can take years to build a power plant and any new plants are likely to produce a fraction of the state's electricity load. But politically the vote makes a statement.

The energy industry, led by Baltimore-based Constellation, has heavily lobbied lawmakers to defeat the bill. The Retail Energy Supply Association, a group of suppliers fighting to enter the residential market, issued this statement from state chair Leah Gibbons last night.

"RESA is very disappointed that the committeee decided to take a step backwards for Maryland electricity constumers. Re-regulation...will end choice for residential and small commercial customers."

Middleton and other supporters of the legislation argue that RESA's members have had years to enter the market.

The Senate will take up the legislation later this week. Its chances for passage are better there than in the House of Delegates, where members of the Economic Matters Committee have expressed skepticism about passing it this year.

By Lisa Rein  |  March 25, 2009; 8:21 AM ET
Categories:  Lisa Rein  
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Comments

Deregulation was supposed to bring competition and lower prices to MD electricity consumers (that is, all of us). That, obviously, has not happened. On the contrary, there is virtually no competition and prices have actually skyrocketed. Deregulation has been an abject failure. No wonder BG&E is upset -- deregulation was a very sweet deal for them. Not so much for MD consumers.

Time to reregulate now!

Posted by: crm1951 | March 25, 2009 11:02 AM | Report abuse

Wow, now even the reporters are stating as fact that the reason for the increased bills are "a colder winter, longer billing periods and locked-in contracts." Those myths were what the electric supply companies were spouting and were debunked (allegedly) by this same paper! FACT: The bills went up because of that 72% deregulation hike! So why aren't the re-regulating across the board now??? They could do it if they wanted to; what could is it to regulate one newly built power plant in the future??? I hate that they keep thinking we're stupid and if they throw a crumb our way we'll forget the truth.

Posted by: hcpf | March 25, 2009 12:02 PM | Report abuse

YES! Push this re-regulation through...even though the power barons have already fleeced us for a bundle. We'll never get it back from those profiteering theives.

Posted by: free-donny | March 25, 2009 12:28 PM | Report abuse

Deregulation failed in Maryland because the state regulators insisted on stacking the deck against entry of competitive generators, i.e., they forced the utilities to sell power at 10% below the then-current price (so as to "demonstrate" the benefits of competition immediately). This price, coupled with the NIMBY-driven opposition to the building of any infrastructure in Maryland, pretty clearly signaled to competing sellers of power to look elsewhere. The politicians were then somehow "surprised" that the magic of competition failed. It was never given a chance to succeed. Now we will again turn to politicians to decide how our money is spent.

Posted by: MHegerle | March 25, 2009 12:46 PM | Report abuse

Our electric bill used to be around $200 a month before deregulation. This past winter, despite turning our thermostat down more than 5 degrees and taking numerous energy-saving steps, our electric bills were almost $600 per month. To say that we are furious would be an undertatement. The deregulation of this industry is another example of the failed Republican dogma that deregulation is always good and always benefits consumers. The only people who are benefiting from this arrangement are the executives at Constellation. Given the current economic downturn and the resentment toward executives who enriched themselves while fleecing the public, I'm not surprised to see the MD legislature take some action. But this bill is a mere fig leaf. It does nothing to re-regulate the utility as a whole, which is what MD citizens desperately need. To me, it's worse than doing nothing because it suggests that they don't have the will to do what really needs to be done.

Posted by: CBS64 | March 25, 2009 1:05 PM | Report abuse

Lisa Rein wrote: The re-regulation bill is unlikely to effect electricity rates in the short term, since it can take years to build a power plant and any new plants are likely to produce a fraction of the state's electricity load.

She should have written: ...unlikely to affect (not effect) electricity rates... Affect means to alter or modify. Effect means "put into effect."

Posted by: jrsposter | March 25, 2009 1:17 PM | Report abuse

Oh no. I guess I haven't been paying attention. I have been buying 100% wind power from an alternative supplier for several years -- so now they're going to force me to go back to coal?! [insert stream of profanity here]!!!

Posted by: Janine1 | March 25, 2009 1:54 PM | Report abuse

Janine, I am in the same boat as you...and i saw the WGES plea to fight re-regulation. I don't think re-regulation eliminates companies utilizing wind power at all.

They will merely be included in the equation in a different, perhaps more cost-effective manner. This area does not have a bunch of "excessive kilowatts" and every supplier currently feeding Wash area consumers will be needed. No commerical power broker will be pro-re-regulation. Know that...

The best scenario of re-regulation (should it take this form) would be government (voter/consumer) control and leverage over suppliers to convert to wind and solar electricity generation on a mandatory scale. In other words, if a company does not begin to convert...they do not get to play.

The no-regulation scenario simply cannot continue. People will be priced out of using electricity and that will hurt the regional economy.

I am with you...the 100% wind option was well worth the extra $10-$20 I'm paying for it. I am really dizzy when I hear posters claiming $600/month electric bills. That is INSANE! I never pay more than 150/mo. though I have gas heat...and we use the fairly A/C economically in summer.

Posted by: free-donny | March 25, 2009 2:35 PM | Report abuse

My bill stays under $200 in the summer and much less in the winter (for a house, not an apartment). And I'm not sure we're even paying that much extra for wind now -- in the last couple of years, the rate for standard offer service has gone up while wind has stayed the same or gone down a bit, so I think they're much closer now than when I signed up.

I know deregulation hasn't been good for everyone, but coal is just the worst possible option. Now I'm going to have to start using those god-awful CFLs.

Posted by: Janine1 | March 25, 2009 2:54 PM | Report abuse

Janine, the CFL's are much better now. They can be obtained in different "brightness level"s and they really do save watts. They generally use less than 25% of the equivalent normal bulb. You dont have to change all your lights either. These things last a long time as well. I have a few external security lights that stay on from dusk til dawn and I've not changed the bulbs for over three years. They are defintely saving energy.

I tell my kids that by the time they are grown, much of our electricity will come from wind, sun, or water...and I really believe it. Also, they will no doubt be driving or riding in hybrid or all electric vehicles.

Here is some news, President Obama just put the kibosh on blowing up mountain tops to obtain coal. It has effectively stopped. Don't know if it can last, but its a great feeling to hear that we are trying for a change.

Posted by: free-donny | March 25, 2009 3:03 PM | Report abuse

I have not yet found a 3-way CFL that will fit in any of my lamps. (That's mostly what I use, and I was happy when they finally started making 3-way CFL bulbs, but they were either too big for the socket or too tall for the lampshade.) At least with wind power, I could say that sticking with incandescents was a matter of extra money and not carbon.

Posted by: Janine1 | March 25, 2009 3:09 PM | Report abuse

What say do we ultimately have in these matters? In the past 5 months they charged us $600/month, we argued, then eventually paid $600/month plus some late fees. In the next few years, they'd charge us $5000/ month; we'd argue, then pay $5000/month plus steeper late fees...

...is anyone out there setting up a class action? All my lawyers friends, please garner the courage to step up and fight this INSANITY!

Posted by: Electrocuted | March 25, 2009 3:12 PM | Report abuse

Thank god...we were all fed that typical line of BS by the utilities "Deregulation will foster competition, drive prices down and give you choices".

Yeah...the choice to accept ~30% price increases every year, or go without power.

I am a Pepco customer, living in the same house and my electricity bill has doubled over the past couple of years.

"Choice and competition" my ass.

Posted by: Nosh1 | March 25, 2009 3:16 PM | Report abuse

Good point...I did not even think about the 3-way bulbs, but I've seen the CFL's improve since first introduced.

I truly believe wind-powered electricity is not going away (regulated/unregulated) ... is defintely here to stay. Currently, plans are being laid out to use federal land in the southwest to begin constructing a solar-electric farm of unprecedented capacity. Also, WAPO carried an article on some new wind turbines going up in MD - a couple weeks ago. Hang in there.

Incandescents are not illegal...yet. So, indulge yourself for a few more years...by then the three-way compact CFL bulb will beat a path to your door.

Posted by: free-donny | March 25, 2009 3:17 PM | Report abuse

Nosh, deregulation is that bad ... and MUCH worse. The utilities serving us now are NOT even based in our area. They are mostly out-of-state power barons, who fleece us ... and can take their profits to other states and keep expanding to fleece others...and so on and so on.

Re-regulation is a MUST. The irony is that the GOP will call this "socialism" no doubt. Better to regulate than to rely on foreign sources of fossil fuels.

Posted by: free-donny | March 25, 2009 3:22 PM | Report abuse

The electricity industry was never truly deregulated. The electric utilities in Maryland (i.e. Alleghany, Pepco and BGE) were given marching orders by the Maryland State Public Service Commission to competitively procure energy through scheduled auctions which awarded contracts to the lowest bidders. The MD State PSC oversaw the procurement process from start to finish. Reregulation will not cause the cost of producing electricity to magically fall. Instead, electric bills will be partially subsidized by the State of Maryland. This is a political gain for lawmakers in Maryland because ratepayers may see lower electric bills, but you can be sure that someone else somewhere else is paying for the subsidy.

Posted by: jdawg2 | March 25, 2009 5:01 PM | Report abuse

jdawg, if "re-regulation" (we'll have to agree to disagree on what the term stands for in MD) does cause electric prices to fall for consumers, the first hing to fall should be corporate profits and price-gouging. No one can deny how much we're getting milked by profiteers.

Posted by: free-donny | March 25, 2009 5:58 PM | Report abuse

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