"There's no question we're going to have to get customers used to the idea that they're going to have to also take steps to help address the issue," Larsen said. "If they're looking to go back to the days of cheap, plentiful, endless supplies of electricity with no impact on the environment, I do think those days are over."
To reward consumers for reducing their electricity use and investing in energy-efficient technologies, administration officials are proposing an array of incentives and subsidies paid by the energy fund, such as issuing rebates to customers who purchase more efficient appliances.
The fund will not rely on tax revenue. Instead, the governor is banking on proceeds from the auction of so-called pollution credits under an initiative of 10 states to voluntarily reduce carbon dioxide emissions.
Under the Regional Greenhouse Gas Initiative, power plants must keep emissions below a downward-sliding limit, or buy credits from cleaner power plants.
Brandon Farris, policy director of the Maryland Energy Administration, said Maryland expects to receive about $100 million a year from the sale of its pollution credits, though the yield won't be known until the first auction this summer. Larsen said the amount could be twice as high.
But Del. Warren E. Miller, a Howard County Republican on the House Economic Matters Committee, said he doubted that the "cap and trade" system would create even a $100 million windfall, and that added costs borne by power plants would probably show up on consumers' electrical bills.
"I have a fear that's going to be passed on to Maryland electrical consumers," Miller said. "The cost to our consumers should trump everything else."
A spokesman for Constellation Energy Group, the corporate parent of BGE, said the utility would maintain a "thoughtful and constructive dialogue" with the legislature and the O'Malley administration, but declined to answer specific questions about the electricity plan.
O'Malley officials acknowledge that power companies probably would pass on to consumers the costs of buying pollution credits, which would in turn drive up electricity bills unless the added costs are offset by reduced usage.
That's why the governor wants to use the fund to make it easier for consumers to lower energy consumption, Abbruzzese said.
But recent tax increases and economic uncertainty might spur a fight in the legislature this session if lawmakers prefer to give all or some of the $100 million back to consumers.
