Lawmakers on Tuesday questioned the Maryland Public Service Commission’s conclusion that an incremental, shotgun approach to the re-regulation of the state’s electricity industry is the best option for ratepayers.
Instead, some said full re-regulation — the repurchase of electricity generating plants, discounted as too expensive and risky by the PSC — warranted further investigation.
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The PSC in a report to the state legislature last week said the repurchase of the power plants would provide some benefits to ratepayers but also carried significant risks, potential costs and potential disruptions of service.
Rather, the commission supported what it called “re-regulation light,” leaving generation in the hands of private companies but using its current authority to control costs and energy supply.
In hearings before the Senate Finance Committee and House of Delegates Economic Matters Committee on Tuesday, PSC Chairman Douglas Nazarian defended the agency’s conclusion. Attaching a dollar sign to the benefits of full re-regulation is easy, Nazarian said, but its risks are also real and harder to quantify.
“I don’t think there are too many people in this room or elsewhere that would sign up to go through again what we did in 1999, knowing what we know now about the pain of restructuring,” he said. “It would take enormous political will … to struggle through that process again.”
But Sens. E.J. Pipkin and Jim Rosapepe focused on the benefits of full re-regulation, and questioned the PSC’s reasons for not favoring that policy.
“When I go back to my constituents and they ask where we are on this, telling them, ‘the numbers say yes but the will says no,’ that is not an acceptable answer to them,” Pipkin said.
In an interim version of its report last year, the PSC placed the total cost of buying back the state’s power plants at between $18 million and $24 million, a number that brought most serious discussion of full reregulation to a halt.
The number was not updated in the subsequent final report and was questioned by Pipkin and PSC financial consultant Richard Levitan –both who said the current number “could be materially outside that range.”
Senate Financial Committee Chairman Thomas Middleton said the group would seek additional information from the PSC about full reregulation.
“We have no trouble with the idea of going in that direction – if it’s the best deal for ratepayers,” Nazarian said. “But we are concerned that a categorical, rigid commitment to one form [of reregulation] or another is not in the ratepayers’ interest.”
