PSC mum on rate strategy

November 18, 2006|By Paul Adams | Paul Adams,Sun reporter

The Maryland Public Service Commission completed hearings yesterday on the optimal structure of the electric industry but gave no hint as to how it might rule on myriad proposals aimed at bringing rates down for consumers.

The commission took testimony over two days from 20 witnesses who hold divergent views on how utilities can obtain the best outcome for consumers when buying electricity in the wholesale market.

The review of Maryland's deregulation laws was ordered by the General Assembly last summer as part of legislation aimed at mitigating a 72 percent rate increase for customers of Baltimore Gas and Electric.

The state people's counsel, which represents residential utility customers, wants electricity firms to consider a buying strategy covering a 10- to 15-year period, replacing the current system that calls for staggered, two-year contracts for power supply.

The people's counsel strategy would allow utilities to craft and manage a portfolio of short-, medium- and long-term supply contracts, as well as exploring the possibility of building or leasing new power plants.

Utilities gave up owning power plants as part of the move to deregulation, but some witnesses argued that peeling back that requirement could lead to cheaper and more stable prices for consumers.

Representatives of the retail power industry say that such a move would make it harder for competitors to enter the market to take away customers of BGE and other utilities.

That would defeat the purpose of deregulation, they argue, and lead to fewer choices for customers.

The retail sellers want utilities to go into the market to buy power either monthly or quarterly, resulting in electric rates that would more closely match real-time market conditions.

Critics say that approach could subject consumers to frequent, sharp price swings.

The PSC is expected to present lawmakers with a report on their findings by Dec. 31.

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