Rate relief gets a boost

Senate panel backs electricity credit of about $5 a month

General Assembly

March 26, 2008|By Laura Smitherman | Laura Smitherman,Sun reporter

Anxious about soaring electricity costs, a Senate committee voted to give households a break on monthly bills by using money that had been set aside by Gov. Martin O'Malley for energy efficiency and conservation.

The proposal would provide a credit estimated at $5 a month to help consumers cope with double-digit increases in electricity rates. O'Malley, a Democrat, has pledged to address rising rates and Maryland's energy crunch, but lawmakers said yesterday that he hasn't done enough to help consumers.

"We've promised them rate relief, but we've given them no relief," said Sen. E.J. Pipkin, an Eastern Shore Republican who proposed the rate credits.

The Senate Finance Committee approved the plan as part of the O'Malley administration bill that creates the Strategic Energy Investment Fund, which would pay for conservation, renewable energy programs and climate change research. It would be funded in part by the state's cap-and-trade system intended to reduce greenhouse gases, established through a multistate agreement that O'Malley signed in 2007. By some estimates, that system could generate $140 million annually.

But environmentalists objected to the proposal, saying the money should go to help consumers lower energy consumption - and their bills - over the long term through rebates for energy efficient appliances, home weatherization and other measures. Brad Heavner, state director for Environment Maryland, called the proposal a "short-term political payoff that cheats consumers."

Johanna Neumann, state director of the Maryland Public Interest Research Group said the proposal shows that lawmakers are "out of touch with consumers" and noted that studies have shown that every dollar invested in energy efficiency results in $4 in savings.

"You can't even go to the movies for that amount of money," she said of the proposed credit. "And people's bills have gone up hundreds of dollars."

The proposal faces some resistance in the House of Delegates, and senators could still amend the legislation before sending it to the full Senate for a vote.

Del. Dereck E. Davis, chairman of the Economic Matters Committee, said his panel would consider ratepayer relief but that he would like to focus on bolstering a program that helps low-income residents pay their bills, especially as an economic downturn pinches more of their household budgets. The Senate panel would direct some money to that program.

Davis said any relief would have to be "meaningful" and that conservation and efficiency programs should be funded. "We have to redo our whole way of living as it relates to electricity," he said. "Things aren't like they used to be. We don't have an unlimited supply of electricity."

Malcolm D. Woolf, director of the Maryland Energy Administration, said that not funding conservation and efficiency programs would be "a missed opportunity." He said those programs would save consumers more over time than the monthly credits. By comparison, he said, residents in California, where such programs have been in place for years, now use 42 percent less energy per capita than Marylanders.

The amount of any consumer credit in Maryland would depend on the success of the regional greenhouse gas initiative, which requires utilities to buy "allowances" for emissions from fossil-fuel plants. Estimates for the money raised by auctioning those emission rights have ranged from $80 million to $260 million a year. The first auction is scheduled for September.

The General Assembly is considering a number of administration bills this year aimed at increasing reliance on conservation as well as on renewable energy in an effort to stave off rolling blackouts, which state officials predict could come by 2011 without some intervention.

Another bill approved yesterday by the Senate Finance Committee would more than double, to 20 percent by 2022, the amount of renewable energy that Maryland utilities must purchase for sale to their customers. The panel delayed implementation of the bill by two years.

Money raised from compliance fees through that bill would be directed to the same energy investment as the emission auction proceeds.

The panel also approved legislation that aims to reduce energy consumption in the state 15 percent by 2015 by requiring utilities to offer consumers financial incentives to conserve. When the state deregulated the energy industry in 1999, programs that reduced consumer demand or promoted conservation became less prevalent because companies have less incentive to reduce consumption.

Lawmakers also have introduced a bill to limit certain costs that are passed on to BGE's customers, potentially saving them more than $1.4 billion in the coming decades. It would grant the Public Service Commission more oversight of those funds, which are collected to pay for the eventual dismantling of the Calvert Cliffs nuclear plant. That bill has not yet received a committee vote.

Sen. Thomas M. Middleton, chairman of the Finance Committee, said lawmakers are holding off on that legislation while negotiations are under way between the Maryland attorney general's office and Constellation Energy Group, parent company of BGE. The two sides recently filed dueling lawsuits over credits that the legislature forced the company to give consumers in 2006 as part of a response to impending rate increases.

Middleton predicted that the legislature will ultimately approve the bill, though he said its final form would depend on the success of the negotiations. With less than two weeks left in the legislative session, Middleton said he hoped the two sides could reach a settlement. He said that the state needs Constellation as a partner in solving the state's energy needs.

laura.smitherman@baltsun.com

Sun reporter Timothy B. Wheeler contributed to this article.

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