It?s decision time for the Maryland Public Service Commission.
Baltimore Gas and Electric presented its winning bid Thursday to the PSC, but results were not made available to the public. The commission is still reviewing the bid, and can either accept or reject it for Maryland consumers, and will release the results today.
Previously BGE had projected consumers would see more than a $700 increase to their power bills annually, based on information from contracts in place with energy suppliers at that time. But from the bids submitted Monday by BGE, it appears there has been a 2.3 percent reduction from the total initial estimate. This would result in a slightly lower annual increase of about $586 a year for residential customers.
In continued hearings, the commission received testimony from staff who had compiled reports comparing prices paid for energy by BGE on the forward and spot markets. Staff told the commission that for the time period June 2005 through June 2006, if the state had purchased energy on the spot market it would have paid 32 percent more than on the futures market. And in 2006 through 2007, it would have saved more than 29 percent on the futures market. The discussion was presented to the commission in an effort to help it understand the volatility of the marketplace.
BGE staff members told commission members that if they start with one approach to purchasing energy to reduce risk, they need to stay with it and not change approaches midstream. Commissioner Alan Freifeld asked staff what approach to procurement, given the market, would have been the best route to take. He was told “all strategies have peaks and valleys.”
“When you say what is best, best is relevant based on minimizing the volatility which would lead you to one [approach],” Chairman Steve Larsen said. “But if shooting for better prices, that will lead you to another [approach].”
Calvin Timmerrman, the assistant executive director for the PSC, views the unpredictable market as something that can be beaten, with proper planning.
“There are additional premiums built into larger contracts to hedge against larger volatility,” he said. “You have to look at both the demand and the supply to lower prices for the consumers.”
Hearings will continue and closing arguments are expected.
Staff reporter Dave Carey contributed to this story.
