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Last year's energy inflation, this year's shivers

January 31, 2009|By JAY HANCOCK

Sam and Heather Travaglini turn down the heat pump when they're away or asleep. They bought efficient fluorescent bulbs.

They never put the thermostat higher than 70 degrees, even though the basement has trouble making it into the 60s. Heather "always has a blanket on," even when she's upstairs, her husband says.

So what did they do to deserve a $265 Baltimore Gas and Electric bill this month?

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"It is the highest bill that I have received" since they bought their Columbia townhouse three years ago, says Sam Travaglini. "I kind of anticipate that the next one is going to be even higher."

Metro Baltimore is freezing, worried about the recession and wondering why BGE bills are higher than ever even as the cost of gasoline, electricity and other energy has plunged.

Blame a cold winter and BGE's purchase of electricity last year when energy prices were hitting record heights. The popped energy bubble should eventually mean moderately lower BGE bills.

"In 2010, I think we'll see in the range of 5 to 10 percent potential drops in retail electric rates," says Mark Case, BGE's senior vice president of strategy and regulatory affairs. Natural gas rates could go down by much more.

But the long-term trend for all energy prices is still upward.

This winter's electric bills include costs for carbon emissions and renewable fuels that are likely to grow as the country tackles climate change. Marylanders will also pay for new generation at Calvert Cliffs, where BGE parent Constellation Energy plans to add a third nuclear unit, and elsewhere.

Many would be thrilled with a $265 BGE bill. The Baltimore Sun's weather blogger, Frank Roylance, says his passed $300 for only the second time in a dozen years. (Blog post title: "Yeeoweee!") Mine was $357, the highest I can remember. Tales of $700 bills and higher from people in older, poorly insulated homes are common.

Deregulation is still a factor, of course. BGE used to sell relatively inexpensive electricity from its own coal and nuclear plants. But Maryland lawmakers allowed BGE's unregulated parent to take over the generators while BGE has to shop for more-expensive juice on the open market.

Full deregulation, however, kicked in almost three years ago. Today's extra-high bills come from last year's energy inflation and this year's shivers.

This winter, temperatures are 8 percent lower than normal, BGE says. That translates into as much as 10 percent more kilowatts burned - or higher if you have a heat pump or baseboard heaters.

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