Two Maryland lawmakers who are among the most vocal in Annapolis on energy policy presented opposing views on the issue of whether to re-regulate electricity rates at the Greater Baltimore Committee’s December 9 Energy Symposium.
Senator E.J. Pipkin said his support for re-regulation relates to his contention that retail customers in Maryland face a “monopoly situation” for electricity supply, he told a symposium audience of more than 75 GBC members who crammed into a conference room at the UMB BioPark.
“In monopoly situations, you must regulate,” said Pipkin, a Republican representing Eastern Shore counties. He contends that the state’s major utilities and the PJM grid, the supply consortium of 13 states constitute, in effect a collective monopoly of utility owners.
Senator Robert J. Garagiola counters that advocates are propagating a myth that re-regulation would take us back to lower electricity costs. “That’s not necessarily the case,” he says.
Even the state’s Public Service Commission and expert forecasters do not guarantee that re-regulation would bring about electricity rate savings anytime soon. At best, some experts suggest that re-regulation might possibly produce some benefit in 20 years, says Garagiola, a Democrat who represents Montgomery County. On the other hand, businesses are today benefiting from de-regulation by exercising the choice they have available to them.
Pipkin concedes that commercial customers have been successful in achieving savings in the de-regulated market. “But the focus in Annapolis, though, has been on the retail customer because that has not evolved, the competition has not evolved at that level,” he says. “And frankly, it hasn’t evolved in any state across the country.”
“Residential ratepayers do have choice today – just like businesses do – to save on their electricity costs; just like local governments do, and they’re saving millions of taxpayer dollars because the state has a choice,” Garagiola responds.
Most members of a panel of experts who also presented at the Energy Symposium agreed, however, that it has been difficult getting significant numbers of residential customers to engage in so-called “demand response” efforts to reduce consumption during times of peak demand or to exercise supplier choice that is available to them.
“Residential consumers are, by and large, non-responsive,” said H. Bertram Wilson, director of portfolio management at South River Consulting/EnerNOC.
Panelists concurred that returning to a regulated environment was not an advisable policy. They also noted that the current market respite from rising electricity prices – driven by demand reductions related to both the recession and to customer conservation – is probably temporary and that increasing post-recession demand will likely cause prices to rise. Rising prices can be significantly mitigated by informed consumers making smart electricity buying choices, they noted.
“What will save consumers money is giving them the tools they need to compete,” said Glen Thomas, president of the PJM Power Providers Group.
H. Russell Frisby, a partner at Fleischman and Harding and former chairman of the Maryland Public Service Commission, stressed the need to improve the transmission infrastructure that brings electricity into Maryland from the PJM grid.
Timothy Brennan, professor of public policy and economics at UMBC, said that, while it’s easy to be a naysayer about de-regulated electricity markets, re-regulating them won’t make costs disappear and that market-driven customer conservation is beginning to have a significant positive effect.