February 26, 2002
The Baltimore Sun
Gary Skulnik
THE PARTY'S over for electric deregulation. The question is, will Maryland consumers get stuck cleaning up the mess?
When he led the fight to pass deregulation legislation in 1999, Sen. Thomas L. Bromwell Jr., a Baltimore County Democrat, erroneously declared that the bill was a "well-balanced blueprint for change, with carefully crafted protections for consumers, businesses, utilities and the environment." What Maryland got was a money-making dream for utilities. But it's looking like a nightmare for the state's consumers.
To Senator Bromwell and his corporate backers, including utility giant Baltimore Gas and Electric Co., Maryland in 1999 was about to enter an era of huge profits and taxpayer handouts for the utilities, with a few small bones thrown to consumers to keep them quiet. These bones included a minor rate cut and, more importantly, "electric choice" - the ability to choose an electric supplier from a variety of competing companies.
But the deregulation bubble has burst.
The Maryland Office of People's Counsel (OPC), an independent state agency that represents residential customers in utility issues, released a report in January that has exploded the myths of Mr. Bromwell's deregulation scheme. Titled the "Report on Electric Choice," it includes some very unsettling findings, one of which is that deregulation has failed to provide consumers with the benefits that Mr. Bromwell and BGE touted.
"Thus far, Maryland's deregulation experience has not produced the expected results...[consumers] have seen no real savings from competitive retail electric markets and have no real opportunities to switch between electricity suppliers," the report said.
Worse, in the next two to four years, Maryland consumers will lose the one thing standing between them and out-of-control, California-style electric rates - a state-imposed price cap. The OPC, understanding the implications of this, recommends that lawmakers extend the price caps until such time as the energy market is "mature" enough to prevent power companies from artificially jacking up prices.
For example, last summer, the spot price for electricity went up to 25 cents per kilowatt hour (kWh) at times, but consumers paid just 5 cents per kWh because of price caps. If our legislators don't take action quickly, a "California crisis," with its 500 percent electric bill increases, is just around the corner.
Senator Bromwell was wrong about deregulation having benefits for consumers, and he's wrong about its effects on the environment. Many of the states that adopted deregulation also adopted a Renewable Portfolio Standard (RPS), a requirement for electricity providers to get a specified percentage of electricity from clean, renewable resources such as wind and the sun. This was done to offset potential environmental harm and ensure a diversity of energy sources.
But Mr. Bromwell and his corporate backers shot down every effort to adopt an RPS. He blocked an effort in 2000, claiming that deregulation needed time to work, and he did the same thing again last year. Meanwhile, the Environmental Protection Agency is telling Maryland that its air and water can't take further pollution. But because of Mr. Bromwell's deregulation, out-of-state power companies are free to build polluting power plants in Maryland.
Price caps should be kept on electricity.