Re-regulation of electricity vexes lawmakers

Friday, April 10, 2009

Despite his personal reservations, House Economic Matters Chairman Dereck E. Davis said last week that he planned to call for a committee vote on a bill to re-regulate the energy industry.

The Senate last week voted 27-19 for a bill that states Maryland's intention to place stricter rules on rates for residential customers and to regulate new plants built in the state. The bill, pushed by Gov. Martin O'Malley (D), gives the Public Service Commission the power to order the construction of new plants and to regulate plants built after July 1.

Davis (D-Prince George's) has been reluctant to push the legislation through his committee, citing the short timeline and his preference to work on the issue during the interim. The Senate's passage of the legislation has no bearing on the work of the Economic Matters Committee, he said.

An Economic Matters subcommittee has been considering "basically identical" legislation sponsored by Del. Jeff D. Waldstreicher (D-Montgomery). That bill will be the vehicle for the House's work, Davis said.

"The subcommittee is working, they're going to work their way through the process, try to get through it as quickly as they possibly can, and I do intend to schedule a vote for it at some point [this] week," Davis said.

The legislation, which the Senate Finance Committee debated for the past month, would require residential customers and small businesses to buy their power from large utilities such as Baltimore Gas & Electric.

Already proposed plants, such as a third nuclear reactor at Calvert Cliffs Nuclear Power Plant in Lusby, would be exempt. The state's largest industrial and commercial customers would be able to continue to shop for electricity from suppliers with the lowest rates.

Both sides acknowledge that the bill will do nothing to bring rates down in the short term.

Opponents, including energy suppliers, maintain the price caps on rates have come off only in recent years and the legislature should allow the market to attract more residential customers. Supporters say it will give the state more control over its energy future.

An O'Malley spokesman said April 2 that the governor had met with Davis within the past week and re-regulation was discussed.

"The governor's hope for passage remains the same," said O'Malley spokesman Shaun Adamec. "It's important for Maryland's ratepayers to return authority back to the people in the form of the Public Service Commission and to definitively say by a vote on the floor of the House that deregulation failed and we want to return a rational system of regulation to our energy markets."

Davis remains unconvinced that the legislature needs to take action this session.

"I'm just not comfortable that I can make an informed decision to bring it to the body with so little time left," he said.

Senate Finance Committee Chairman Thomas "Mac" Middleton said he has no such reservations, comparing the current debate to the 1999 debate over deregulation.

"When you look at who advised us going into deregulation, it was Enron, it was Constellation, it was the big industrial and commercials," he said.

This time, the return to regulation was recommended in a PSC study led by consultants, said Middleton (D-Charles).

"I have a lot of trust in the PSC," he said.

Legislators are "anxious to undo the vote that they did in ‘99," Davis said. "We had nothing to base [the 1999 decision] upon. We took the presentations that we had, made the best decisions that we thought we could. It didn't turn out the way we wanted it to," he said.

"This time I want to make sure that we do, in fact, find out all the information that we can and not make another bad decision simply because we were encouraged to do so."

abrody@somdnews.com