‘Public interest is not served by deregulation,’ new report says
Full re-regulation of the state’s electricity industry is not worth the risks, the Maryland Public Service Commission said Thursday, instead favoring “re-regulation light” and the use of its existing authority to control electricity costs.
In a final report to the state General Assembly, the PSC said the more limited forms of re-regulation could span a broad range of legislative and agency actions, some of which are already under way.
State lawmakers in 1999 opted to deregulate Maryland’s electricity industry, placing power generation plants in the hands of investor-owned utilities in the hopes that market dynamics would keep energy prices low.
“The public interest is not served by deregulation that requires [us] to wait passively for market forces to deliver a reliable supply of electricity at reasonable rates,” the PSC wrote in its report. Rather, the agency said that, “seeking to unscramble the omelet will impose risks on Maryland ratepayers that could well not be worth the uncertain reward.”
PSC Chairman Douglas Nazarian briefed top lawmakers in Annapolis Thursday and was unavailable for comment. He is scheduled to brief the state Senate Finance Committee on the report Tuesday.
Constellation Energy, parent company of Baltimore Gas and Electric, had no immediate response to the details of the report.
Full re-regulation would require buying back the power plants from utilities, which the PSC in a previous report said could cost between $18 billion and $24 billion. Aside from the huge cost, the PSC said Thursday that full re-regulation could expose ratepayers to severe market fluctuations, and may chill interest in outside investment in new power plants.
Earlier this year, state Sens. E.J. Pipkin and Jim Rosapepe suggested making the return of Maryland’s power plants to state control a condition of approving the $4.7 billion merger of Constellation Energy and Mid-American Energy Holdings Co.
Despite the emergence since then of a competing offer by French energy giant EDF, Pipkin said Constellation’s shaky position still gives the state leverage to move toward re-regulation.
“The report certainly doesn’t address the opportunity we have with the Constellation sale,” Pipkin said Thursday. “But overall the report is constructive, there’s a lot to look at here.”
In a preliminary report last year, the PSC said an electricity shortage could cause rolling blackouts or brownouts in some areas as soon as 2011. But it said Thursday that the outlook had “improved somewhat,” and that new resources may be available to fill the gap.
The agency also said it would undertake a study next year to determine whether it should order utilities to build new power plants in the state. The construction of two new nonnuclear power plants could create economic benefits for ratepayers, according to the report.
