Long-term contracts with utilities for electricity and new energy generation might be the key to avoiding traumatic price jumps such as the 72 percent rate increase of two years ago, the state?s Public Service Commission believes.
But Baltimore Gas and Electric and other energy companies said at a PSC hearing Wednesday that such long-term contracts are riskier for ratepayers.
“All long-term contracts do is place a bet on the future,” said Dan Allegretti, vice president and regional manager of Constellation Energy Commodities Group. “The longer the time, the less information that?s available, and the greater the chance the bet will be wrong.”
Wednesday?s hearing was the latest step toward a final commission report later this year on potential re-regulation options. But discussions during the daylong proceeding covered little new ground from an interim report released by the commission in January.
In that interim report, the commission presented a plan to require utilities to enter into long-term energy contracts, which would partially re-regulate the state industry. Those contracts would encourage new electricity generation and lower costs, the PSC said.
According to the interim report, full re-regulation ? requiring utility companies to repurchase generation facilities ? would cost $18 billion to $24 billion.
The Office of People?s Counsel, the state agency charged with representing utility customers, and other groups such as the AARP called on the PSC to demand that energy companies submit a long-term energy plan similar to a managed portfolio outlining how they would handle the state?s energy demand.
Those groups challenged BGE and other energy companies to back their belief in the folly of long-term contracts with hard data and analysis.
“They have a self-interest in making this something other than … an analytical approach,” said Barbara Alexander, representing AARP.
BGE representatives said they had not conducted a hard-numbers analysis of the impact of long-term contracts.
“It seems to be common sense that the longer you commit taxpayer dollars into the future for a service, the greater the chance that you won?t be connected to the market [at that time],” said William Pino, director of energy supply and forecasting for BGE.
