Measure hastens adoption of solar

O'Malley priority that would target Md. utilities draws Republican criticism over costs

April 06, 2010|By Julie Bykowicz |

Maryland is moving to require utility companies to accelerate their use of solar power - an idea rankling some lawmakers who are concerned that an impractical quota would needlessly raise the price consumers pay for electricity.

A plan working through the General Assembly would push energy suppliers such as Baltimore Gas and Electric to rely on a higher percentage of solar power in the next few years than mandated by current law. The bill was approved Friday by the Senate and is moving through the House of Delegates.

The issue - a priority of Gov. Martin O'Malley's - has emerged as a major controversy in the final week of the General Assembly session. House leaders are bracing for a robust floor debate with election-year overtones that could include charges and countercharges of how the governor has handled electricity issues, a dominant theme of the 2006 campaign.

Supporters say the measure would give companies the incentive to build large-scale solar-production projects that could leverage federal stimulus dollars, creating jobs and helping the state more swiftly shift to a reliance on renewable energy.

State law now calls for companies to obtain 2 percent of their power from solar sources by 2022. The latest plan doesn't change that goal but requires utility companies to ramp up more quickly, doubling the early-year requirements and increasing penalties for noncompliance.

Malcolm Woolf, director of the Maryland Energy Administration, said the state "underestimated the success of clean energy" when adopting the solar energy requirement two years ago. "We can get a lot more on the grid a lot quicker than we thought."

But consumers will pay, and some argue that the proposed requirement amounts to an energy tax.

The legislation would take effect in January, so rates this year would be unaffected. Next year, if utility companies comply with the increased solar requirement, consumers would pay 3 cents more each month according to a legislative analysis. If the companies pay penalties instead of purchasing solar energy, those fees would be passed along to consumers at a cost of 6 cents per month, the analysis says.

During the next 15 years, consumers could pay as much as $2 more per month, on top of an average monthly bill of $150, that analysis shows.

During last week's Senate debate, Republicans tried to alter the plan so that consumers would be shielded from the increased penalties. Their ideas were rejected, and the legislation passed 31-15 along a mostly party-line vote.

Sen. E.J. Pipkin, an Eastern Shore Republican, predicted the measure would cost consumers $1 billion over 15 years. He anticipated that utility companies will pay the fines instead of purchasing solar power - pointing out that the state does not produce enough solar power now to meet even the current requirement. Because of that, utility companies paid $1.2 million in penalties in 2008.

"Everyone wants to see renewable fuels be used," Pipkin said. "But when you're setting expectations beyond what is reachable and then penalizing consumers, that's a tax that shouldn't happen."

He called the plan "particularly offensive" because most solar panels are produced elsewhere. Less than two weeks ago, BP Solar announced it was moving its production plant from Frederick to China.

The O'Malley administration has countered that increasing the requirements would stimulate solar projects in the state, creating an estimated 640 jobs in the next seven years. Several such projects have been announced in recent months, including one in Annapolis and one in Charles County, but administration officials said they are nervous that they could fall apart if the companies can't get financing.

"We are talking about a few pennies, a few pennies in 2011, to promote clean renewable energy," said Sen. Robert J. Garagiola, a Montgomery County Democrat. "I think it is well worth it. The costs are minimal. The benefits are great."

But Sen. David R. Brinkley, a Frederick County Republican, said even a few cents "means something to a family on the verge of having their utilities cut off."

Supporters pointed to the domino effect of increasing the solar requirement sooner rather than later.

With utility companies forced to buy solar energy, more solar production plants would be needed, which, in turn, will make it easier for would-be builders to obtain financing, Woolf said. And those new sources of solar energy will drive down the cost that utility companies pay, meaning consumers will also pay less.

Woolf said Maryland is ahead of some states but falls behind places such as Delaware and New Jersey, considered a leader in solar energy. Virginia and West Virginia have no solar requirement, he said.

"We'll pay far more if there is an energy shortage in a few years," Garagiola said.

The House Economic Matters Committee is scheduled to review the Senate plan today.

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