Maryland electricity scheme is fiasco

May 02, 2007|By Jay Hancock | Jay Hancock,Sun Columnist

Lorraine Washington, 76, of Baltimore's Forest Park section, is precisely the kind of consumer policymakers wished for when they deregulated electricity years ago and told Marylanders, "You Use It. Now Choose It."

She learned about electricity alternatives. She shopped for the best deal. She even educated neighbors and got them to switch kilowatt suppliers, away from Baltimore Gas and Electric's standard product.

Now she seems ready to give up on the whole mess.

After hassling with billing mistakes earlier this year, last week she got a letter saying the deal she had with Ohms Energy and ConEdison Solutions was canceled. It's unclear who's at fault, but after I inquired on Monday, Ohms promised to honor the terms of her contract and others that have been thrown into doubt.

Still, Washington says, her investment in time, exasperation and electricity has gotten a lot more expensive than she figured.

"Oh my gosh," she says, "It's been hours, calling and holding and being transferred from one person to another person and told, `Nobody's here. Call back later.' " She feels bad for her neighbors, she says, because "I'm the one who got these folks into it."

So here we are. Five years after then-Sen. Tommy Bromwell boasted that Maryland passed "the best deregulation bill in the nation," real competition is still short-circuited.

Fewer than 3 percent of BGE's residential customers have switched to alternative kilowatt suppliers, and some of them are sorry they did.

Some alternative suppliers that were interested in Central Maryland have started dropping out because they can't compete with BGE's standard electricity product.

And BGE's standard product is no bargain; its post-June 1 price - finalized recently and disclosed yesterday by BGE - will rise some 50 percent on June 1 and start costing the average household $1,570 a year. (That's close to previous estimates, but the exact rate hadn't been determined.)

Ten years ago we were told that electricity deregulation would bring brisk competition and cheaper prices. Deregulation came, and nothing happened. Five years ago we were told competition wouldn't come until the BGE price caps expired. Price caps disappeared a year ago, and there is still no effective competition for the residential consumer.

Last year, a decline in wholesale energy prices prompted Ohms, Commerce Energy, Washington Gas Energy Services and a few other suppliers and brokers to undercut BGE's standard price by 10 percent or a little more.

But many of the deals expire in June, and wholesale prices have come roaring back, frustrating competitors who were hoping to lure BGE customers this summer. Because BGE locked up much of its post-June 1 supply when costs were lower, its 10.713-cent per kilowatt-hour "price to compare" will probably be less than what anybody else can offer.

(This 10.713 cents is a weighted average of BGE's "electric supply" price from June 2007 through May 2008. Summer rates will be higher; non-summer rates will be lower. Everybody also pays BGE's 2.37-cent distribution charge in addition to the electric-supply charge.)

"Nope. It's not something that we can match," says Christine Nevin, of ConEdison Solutions, which says it won't be selling electricity to its 2,000 Maryland household customers (mainly through Ohms) after June. Sending customers back to BGE's standard product, she says, is better than rolling them over to a more expensive ConEdison product.

Dominion Retail has also stopped seeking Maryland electricity clients, although both companies say they remain interested and intend to come back.

Nor does anybody else look likely to beat BGE's standard price. Maryland Energy Consortium's current price to compare, says boss Steve Rosenstein, is 11.03 cents a kilowatt hour. Commerce Energy is offering 12.7 cents, and some of these alternative deals come with extra charges if you quit early.

And deals made previously have now been thrown into doubt.

Lorraine Washington isn't the only customer of ConEdison Solutions and Ohms Energy who's upset that what she thought was a guaranteed price (9.4 cents) through 2007 got jeopardized by ConEdison's exit.

"So much for me being pro-active trying to get a lower rate," says John Lantz, who lives in Pasadena and had signed up for a similar deal.

It's unclear whether ConEdison Solutions had committed to sell lower-cost kilowatts after June 1. ConEd says it didn't. But in any event Ohms President Sheirmiar White said yesterday that Ohms, which has about 1,000 residential customers in BGE territory, will honor all contracts extending beyond June 1.

"We have financial positions in place that will allow us to serve the customers," he said. "Our main concern is bringing it home for the little guy."

Good for them. Unfortunately, such hassles are only part of the grand, tangled knot called Maryland electricity deregulation.

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