GBC’s Fry: Focus on consumer choice, not electricity re-regulation

Don Fry commentary on WYPR

Two years after de-regulation for most Maryland residential customers, the call for a return to electricity price regulation lingers in Annapolis.

Last year, a re-regulation bill passed the state’s Senate but died in a House committee and prospects for such legislation are no better this year. But the Governor and some lawmakers continue to advocate for more, not less, government control over electricity pricing.

A central issue in the debate over de-regulation is whether healthy price competition is effectively being introduced into Maryland’s electricity market. A huge irony is that both supporters and opponents of de-regulation agree on a major point – residential consumers are not realizing the price benefits that commercial customers are enjoying.

Statistics support this perception. Statewide, only 4.4 percent of Maryland’s almost 2 million residential customers are exercising their right to choose their electricity supplier. That compares to 23 percent of small commercial customers and 89 percent of large commercial and industrial customers that shop for their electricity.

Does this discrepancy exist because residential consumers can’t shop for electricity? Or is it that they simply aren’t shopping – at least not yet? 

Right now, Baltimore-area residents can choose from BGE and nine other electricity suppliers. Offers are posted online at prices ranging between 10 cents and 13.5 cents per kilowatt hour. (Electricity suppliers serving Maryland)

But residential customers have clearly been slow to exercise their ability to shop. There are, however, recent encouraging signs of momentum. Since January, electric suppliers competing with traditional Maryland utilities have attracted 33,000 new residential customers – a 60 percent increase in residents exercising electricity choice.

Remember, commercial electricity customers in Maryland had been operating in a de-regulated environment for years before residential rate caps were lifted. Residential customers need more time to learn how to benefit from choices de-regulation affords them.

The state would be better off facilitating this learning process than re-regulating.

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