Consumers in Maryland and 12 other states will overpay for electricity by an estimated $12 billion during the next few years because market rules to spur construction of power plants are instead enriching energy companies, state utility regulators said in a complaint yesterday.
The state Public Service Commission joined a coalition of regulators and power buyers throughout the Mid-Atlantic power grid asking federal regulators to refund the excess payments, which it says have resulted in "unjust" electricity prices.
The group says so-called wholesale "capacity" auctions for electricity generation committed for 2008 to 2011 did nothing but enrich power generators in Maryland and other states, while resulting in little or no new plant construction to help safeguard reliability of the grid.
In a complaint filed with the Federal Energy Regulatory Commission late yesterday, the coalition says regulations establishing the market for electric generation capacity are vulnerable to abuse and manipulation by power generators. That makes it possible for some generators to use their market influence to artificially raise prices, the complaint said.
"If these unreasonable results stand, customers will pay significantly higher capacity charges than justified, but with little discernible benefit, while existing generators will receive an unwarranted windfall," the complaint says.
With the addition of an 8 percent rate increase tomorrow, BGE's Maryland customers will be paying 85 percent more for electricity than before deregulation was passed in 1999. Capacity charges are one component in the price of power that Baltimore Gas and Electric Co. buys for its 1.1 million customers and has contributed to rising prices in recent years.
A spokeswoman for the FERC could not be reached last night.
Steven B. Larsen, PSC chairman, declined to comment, saying the commission and other coalition members will discuss the filing at a briefing Monday.
The complaint was filed against PJM Interconnection, which operates the electric grid and wholesale power market for Maryland, the District of Columbia and 12 other states. A spokesman for PJM could not be reached last night.
A spokesman for Constellation Energy Group, the state's largest power generator, said he had not seen the complaint and could not comment on it. However, the company says the capacity market is helping to spur development of new generation as it was intended. Constellation and other power companies say higher prices are needed to gain financing to pay for the soaring cost of new plants.
