GBC’s Fry: Are re-regulation and energy innovation compatible?

Don Fry Commentary on WYPR

Because of the price-increase trauma we all experienced in 2006 as a by-product of Maryland’s 1999 de-regulation of electricity, Marylanders tend to think that de-regulation hasn’t worked.

But the fact is, de-regulation in Maryland and elsewhere has been far from a failure, local energy experts say.

Remember, the 2006 price shock for residential electricity customers occurred because for seven years prices were, by law, artificially frozen at mid-1990s levels. Try that with any essential commodity and you’ll often get the same result.

But, as speakers at a recent Greater Baltimore Committee energy symposium pointed out, de-regulation did accomplish one very important outcome. Along with supplier choice, it brought entrepreneurial approaches to the energy marketplace. The de-regulation of energy markets here and across the U.S. has attracted innovative entrepreneurs and new products and services for lowering and controlling the costs of electricity.

Maryland utilities now have large divisions geared to providing customers with conservation strategies and cost savings. A growing cadre of private energy brokers and consultants now serves Maryland’s business community, saving millions in costs annually. Nationally, the de-regulated energy market has captured the attention of giant private-sector corporations, such as Lockheed Martin, who are investing billions in applying space-age technology to developing alternative energy generating methods that range from transforming agricultural and industrial waste into energy to converting ocean wave movement into grid-ready electricity.

This year, state lawmakers seriously, but unsuccessfully, considered reverting Maryland back to regulated electricity.

Paradoxically, many of the same people in Annapolis who favor re-regulating electricity also support aggressive private-sector development of alternative sources of electricity, citing the need for incentives to build a renewable energy business sector in Maryland.

They correctly understand that the levels of innovation and investment required to develop meaningful alternative sources of electricity can only come from the private sector.

But how much private-sector interest would there be in investing millions to develop alternative ways to generate a product when its market price will be tightly regulated by government?

It’s a fair question.

For the Regional Business Report, this is Don Fry, President and CEO of the Greater Baltimore Committee, for 88.1 WYPR, your NPR news station.

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