Rush to re-regulation

Some resist O'Malley's bid to get electricity plan enacted in this session

General Assembly 2009

April 01, 2009|By Laura Smitherman | Laura Smitherman,laura.smitherman@baltsun.com

Gov. Martin O'Malley's proposal to re-regulate the state's electricity markets could short-circuit in the final days of the General Assembly session as some lawmakers say they don't have enough time to fully vet the legislation.

The Senate has scheduled a vote Wednesday that many predict will be close, and key members of the House of Delegates have raised concerns that the legislature is moving too fast on a plan that represents a significant policy reversal from the state's decade-long foray into deregulation.

"I'm just not comfortable that I can responsibly bring a bill to the floor at this late date," said Del. Dereck E. Davis, a Prince George's County Democrat and chairman of the Economic Matters Committee, which has purview over energy issues. "My focus is on getting it done right."

O'Malley introduced the bill with six weeks left in the session that adjourns in mid-April, and the House committee held its first hearing last week.

The governor met yesterday with Davis and still aims to get legislation passed this year, spokesman Rick Abbruzzese said.

O'Malley, a Democrat, called for a return to a regulated energy market as residential utility bills spiked this winter and state regulators blocked service shut-offs related to overdue bills.

He also seized on news of $32 million in bonuses for Constellation Energy Group executives as further evidence that deregulation has failed and that future energy decisions should be based on the public interest, not a profit motive. The company has since revoked the bonus plan.

Critics say the re-regulation proposal won't reduce electricity rates in the short term - a point that proponents concede.

Skeptics also note that the plan has been heavily altered to exempt three proposed power plants as well as large commercial and industrial customers. They question why re-regulation would be the answer for residents but not the other consumers.

Under the bill, the state could order utilities to build power plants or to buy electricity. To cover those costs, the plan would require consumers to pay a surcharge regardless of whether they would use the electricity, a provision that has sparked opposition.

Constellation, the parent company of Baltimore Gas & Electric, has joined with renewable-energy companies and retail energy suppliers to fight the bill.

Sen. Thomas M. Middleton, one of the chief champions of re-regulation, says the proposal has been carefully tailored to be prospective because full-scale re-regulation would entail buying back existing power plants and was deemed too expensive.

He said residents have not benefited from lower electricity rates like industrial consumers that have shopped for power, and that residents would fare better under a regulated system where the state sets the rates.

Consumers now pay more because supply doesn't meet demand in Maryland, so the across-the-board surcharge to pay for new generation is fair because everyone would benefit, Middleton said.

But many lawmakers have expressed some reservations.

"There's a risk, if we screw this up, of unintended consequences," said Del. Brian J. Feldman, a Montgomery County Democrat on the Economic Matters Committee.

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