Baltimore Gas & Electric's residential customers will pay an estimated 5.5 percent more for electricity starting in June, largely as a result of federal rules that are driving wholesale energy prices higher, state officials and industry experts said yesterday.
The increase will add about $100 to the average customer's annual utility bill, although the amount will vary depending on usage, the state Public Service Commission said. When combined with increases imposed since rate caps expired in 2006, BGE customers will be paying 85 percent more for electricity than they were before the General Assembly approved deregulation in 1999.
News of the higher prices follows a complaint the PSC filed last week with the Federal Energy Regulatory Commission, blaming outdated wholesale market rules for handing windfall profits to certain Maryland power generators. A different set of FERC- approved rules contributed to the latest price increase, the PSC staff said. Both sets of rules and other factors driving wholesale electric prices higher are at the heart of the PSC's current drive to bring utility rates down.
But more than a year into that effort, the latest increase shows just how difficult it is for state regulators to influence the federally regulated wholesale energy market. Many policy decisions affecting prices in Maryland are made in Washington with only limited input from state regulators.
"Because utilities no longer own generation plants that the state can regulate ... we're at the mercy of what comes out of those wholesale energy markets," said Bill Fields, an attorney for the state Office of the People's Counsel, which represents utility customers.
The PSC staff calculated the rate increase after BGE and other investor-owned utilities in Maryland solicited bids from wholesale electricity suppliers last week. The utilities, which gave up their power plants as part of deregulation, are required to solicit bids twice a year to purchase a portion of their electricity supply for the coming year. Those bids determine what price is passed on to customers.
Results of the latest round show that wholesale energy costs continue to climb, in part because of federally approved rules aimed at addressing the region's growing electricity shortage. The state imports about 30 percent of its power from other states and could face an energy shortfall as early as 2011.
