O’Malley promotes energy solutions

Friday, Aug. 22, 2008

‘‘We cannot stand idly by and wait for market forces or the electricity good fairy to come in and solve this problem for us,” O’Malley (D) said at the annual Maryland Association of Counties summer conference. ‘‘All of the experts are telling us that demand is outpacing supply and we know that there’s no new generation coming online. We have to do something about this now or the rolling brownouts and blackouts will happen.”

Competitive Power Ventures is proposing a power plant for the St. Charles area of Waldorf that is currently in the state permitting process.

O’Malley’s six-point plan to combat the energy shortfall acknowledges that wholesale re-regulation will be a tough sell in the legislature because of the high up-front cost to purchase power plants from the utility companies.

The governor’s proposals, however, will also likely result in even higher electricity bills at a time when ratepayers have recently been hit by post-deregulation price spikes as artificial rate caps expired. That, or the blackouts that are predicted if nothing is done, could be political liabilities for O’Malley as he faces re-election in 2010.

‘‘I know how much all of us wish that there were simple cost-free solutions to this complex problem, but our shared reality is not simple and it is not cost-free,” O’Malley said.

However, the state is taking steps to reduce its dependence on fossil fuels in an effort to save money in the long term. The state government will pool resources with Montgomery County, Baltimore, the University of Maryland and possibly more counties or institutions to leverage its purchasing power in the pursuit of alternative energy. The pledge for more renewables drew the only interruption for applause during O’Malley’s 28-minute address.

‘‘We believe that we can make our state the national leader in renewable energy and we plan to move forward toward making our state one of the very first in the nation to use its market power to jumpstart large-scale commercial renewable energy projects,” he said, noting the possibility of using long-term contracts to accelerate the development of commercial energy projects like an offshore wind farm or a power plant fueled by chicken manure.

The partnership between state and local governments and non-governmental institutions is the first of its kind, Maryland Energy Administration Director Malcolm D. Woolf said. The governor also pitched the partnership to other county leaders at the MACo conference, he said.

Currently, the state is looking to purchase about 200 megawatts of power from renewable sources, enough to power roughly 200,000 homes annually, Woolf said. Although it will likely cost more than purchasing traditional electricity, entering into long-term power contracts will provide security in the volatile global commodities marketplace.

‘‘We know that coal and natural gas are global commodities where the price can go up,” said Woolf. ‘‘The sun always shines, and the wind always blows. The cost of renewable energy does not go up.”

The emphasis on long-term contracts for renewable power drew applause from the crowd, particularly Jim Lanard, head of strategic planning and communications for Bluewater Wind, an offshore wind farm developer in the Northeast.

‘‘The only way in Maryland that renewable power gets built is offshore wind,” he said. ‘‘There’s just not enough land mass to build land-based wind power. Solar works on a house-by-house basis unless you build solar farms in the west, so what we’re looking at is wind, and Maryland, like Delaware, is really the Saudi Arabia of wind power.”

Montgomery County has led the way in renewable power purchases in recent years, adopting legislation in 2004 requiring at least 5 percent of its energy to be purchased from renewable sources. It doubled the minimum requirement to 10 percent in 2006.

The long-term savings is worth the higher upfront cost, said Eric Coffman, senior energy planner for the county’s Department of Environmental Protection. ‘‘We’re actually paying a premium for that clean energy supply,” he said. ‘‘We’re doing it for environmental greenhouse gas reduction.”

The energy crunch has been a chief focus during the first 18 months of the O’Malley administration, from appointing four new Public Service Commission members to launching an ambitious effort to reduce consumption 15 percent by 2015. The state has also waged war with Constellation Energy Group, the parent company of Baltimore Gas & Electric, over the return of energy credits and ratepayer reimbursements that stemmed from deregulation.

But fulfilling long-term energy needs has proven to be complicated. The state is supporting Constellation’s efforts to build a third reactor at Calvert Cliffs Nuclear Power Plant in Lusby, but it’s not projected to be ready until at least 2015. And prospects for extending transmission lines that would supply electricity from outside the Mid-Atlantic grid are slow-moving.

O’Malley said it was important that government play some role, rather than wait for market forces to restore the supply-and-demand imbalance.

‘‘Free markets alone will not secure that future,” he said. ‘‘If we want a more secure, more renewable and more affordable energy future, then there are things that we must do together to bring about that stronger future that we prefer.”

Newly appointed Public Service Commission Chairman Douglas R.M. Nazarian said his agency will strive to put the governor’s ideas into practice. ‘‘We are going to take control of our own destiny, our own future and ... we are not going to sit back and let the markets solve the problems that we identify.”

However, Sen. E. J. Pipkin, a leading voice on utility issues in the General Assembly, said government’s role should be restricted. He opposed O’Malley’s plan to have the state assist local government build ‘‘peaking plants,” which produce electricity for local communities when the demand for power is greatest. One such project is under consideration in Thurmont.

‘‘I see no role for a government agency that continues to struggle to meet its core competency of running water and sewer plants in Maryland being used for energy usage,” said Pipkin (R-Upper Shore).

‘‘This expansion of creating czars in the government, which is what we’ve seen over the last two years, is not something that’s good. Creating a new agency involvement in direct building of power plants is not something that I think is constructive. I think the private market does have a place in the system and I think that’s one proposal that I had some problems with.”

Still, Howard County Executive Kenneth S. Ulman (D) said the consensus to tackle looming energy problems crosses party lines.

‘‘No matter what your political ideology is, I’m finding people across the spectrum are very focused at this moment either for global warming issues or for foreign oil issues or for homeland security issues that we’ve got to be generating local power,” he said.

O’Malley also wants to accelerate the deployment of smart meters and smart pricing that would reduce consumption and save consumers money by using electricity during nonpeak times. He also pledged to provide more financial assistance for low-income families and promote energy-efficient appliances.

The governor’s speech was largely on target, said Robert L. Gould, a Constellation spokesman.

‘‘The governor clearly appreciates the fact that there are no easy solutions and that we must look at many alternatives to meet our future energy needs,” he said in a statement.

‘‘... Key to any solution set must be the ability to balance affordability, reliability and sustainability – all of which are critical to making Maryland an attractive place for future energy investment.”