State regulators don?t see any prospect of keeping electric rates down in Maryland, but they are recommending some ways to keep the lights on, as power shortages loom and no generating plants are being built.
Public Service Commission Chairman Steven Larsen presented to legislators the first of several reports that conclude the most cost-effective way to supply Maryland?s 1,500-megawatt shortfall is to establish long-term contracts with electricity suppliers to encourage them to build more powerplants.
The cheapest but most unreliable source for more electricity is greater transmission from out of state, Larsen?s report said, but that depends on constructing new transmission lines, which faces much opposition. Nuclear energy is the least costly source of local supply, but it will not be available for at least a decade ? and wind power is too expensive. Reducing consumer demand by energy-saving measures is also part of the solution.
Some state senators on the Finance Committee found the solution as unpalatable as the problem.
Long-term contracts guaranteeing prices for electricity to justify investment in power plants “shifts the costs to the customer,” said Sen. E.J. Pipkin, R-Upper Shore. That includes the costs of fuel, maintenance and construction, “but yet they don?t own the assets,” Pipkin said.
Sen. George Della, a Baltimore Democrat, said: “I?m going to have a hard time explaining to my public what this plan is all about. In essence, Constellation Energy and other electric suppliers continue to reap high earnings based on diminished generating capacity, but as long as they get to keep [the money], they won?t build anything.”
Why can?t the state step in and buy the electricity at a discount for everyone? Della asked.
That is one of the options the two PSC consultants agreed on through the creation of a state power authority that could buy electricity and build power plants. “In theory, there?s a lot of potential there,” economist Richard Levitan said.
Committee Chairman Thomas Mac Middleton, D-Charles, said he was pleased with the report on potential solutions to the problems related to the 1998 deregulation of energy and the sale of utility company generating plants.
“We don?t have any law to force them to produce any energy in the state,” Middleton said. “I hate the thought of paying them” to build new power plants. “This [power] authority may have some benefit to it.”
