Electricity sellers start to polish their pitches

December 23, 2009|By Jay Hancock

Want to shop for electricity like you buy cell phones and bread? Nearly a decade after regulators told Maryland consumers, "You use it, now choose it," the kilowatt bazaar could finally open its doors for more than a handful of households.

Gov. Martin O'Malley has given up on a re-regulation bill that could have outlawed merchants trying to undercut the standard price from BGE or Pepco.

He's even sounding sympathetic to the idea of electricity shopping. In a meeting with Baltimore Sun journalists last week, he was open to the idea of making it easier for companies to hawk residential electric deals.

"That might be in order," he said. "Already you see some competition taking place that did not take place to this degree in the past. You see people coming in and selling lower-cost energy to residential customers."

That's a new tune from a governor who got elected by excoriating deregulation and an ensuing 70 percent price increase for BGE households.

O'Malley still wants the Public Service Commission to order construction of generators and send the bill to utility customers. For reasons we don't need to get into, that could complicate or quash electricity shopping.

But there's no reason to build generators now, even if the commission thinks it's a good idea.

Thanks to the recession, the promise of new transmission lines and conservation plans such as BGE's "smart meter" proposal, the system isn't in danger of getting maxed out. Next year's projected peak use will take only 82 percent of the Mid-Atlantic grid's capacity, according to figures from grid manager PJM Interconnection.

Meanwhile electricity sellers are polishing their spiels.

"If we had in Maryland the same conditions we had in Pennsylvania, I dare say you'd have 10 or 12 companies making competitive offers" to households, says Mark Hanks, a marketing manager with Direct Energy, which wants to pitch kilowatt deals here.

With rate caps expiring in some parts of Pennsylvania the way they came off in Maryland four years ago, households there face electricity price increases of as much as 30 percent on Jan. 1. But they're also getting offers from Direct Energy and a half-dozen other companies that undercut the standard utility price and take away some of the hurt.

"It was pretty fast and furious last week updating the list" of companies and prices, says Heather Yoder, consumer liaison for the Pennsylvania Office of Consumer Advocate. "Many competitive suppliers have already come into the market. And we hope more will come."

One way Pennsylvania differs from Maryland is that its politicians are under less pressure from high electricity prices than O'Malley has been. Thanks to last year's collapse in energy prices, sticker shock from expiring Pennsylvania rate caps is painful rather than devastating.

Unlike O'Malley, Pennsylvania Gov. Ed Rendell hasn't repelled independent electricity marketers by talking about re-regulation. Pennsylvania also requires utilities to share customer lists and handle collections in a way that promotes competition. Maryland should have made these changes long ago.

Competitive electricity suppliers haven't boycotted Maryland. They've been scarce. Thanks to BGE's long-term purchase of juice at high 2007 and 2008 prices, a couple of companies have been able to beat its default price. (See my blog for details.) But only 45,000 out of a million households served by BGE have switched.

I'm agnostic on whether electricity shopping will work in the long term. Deregulation's biggest promise - bringing billions in private investment for new generation - is still unfulfilled here.

But you don't know whether a Chinese menu of energy choices will work until you try it. Policymakers should do what they can to get Direct Energy and its rivals to knock on Maryland doors.

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