Key Senate committee approves utility re-regulation

ANNAPOLIS, MARYLAND - Legislation backed by Gov. Martin O'Malley (D) to partially re-regulate the production of electricity in Maryland is headed to the Senate floor.

The Senate Finance Committee approved the bill after several marathon work sessions. It would give the Public Service Commission authority to direct utility companies to build new power plants where and when they are needed. Those plants would be regulated, meaning the price their owners charge for electricity would be capped.

The bill, whose lead sponsor is committee Chairman Thomas Middleton (D-Charles) exempts large commercial and industrial customers, which have had success shopping for power from competitive suppliers. A third nuclear reactor that Constellation Energy hopes to build at its Calvert Cliffs plant also would not be regulated.

The move to re-regulate has been debated in Annapolis for several years, since rate caps were lifted. Customers of Baltimore Gas & Electric were hit with a 72 percent rate hike, and their bills have continued to rise. Pepco customers also are paying much more than they did under a regulated system. Competitors to the large utilities have only a tiny slice of the residential market.

High prices have been a political problem for O'Malley and lawmakers. Adding to the problem, gas and electric bills across the state skyrocketed this winter, owing to relatively cold weather, longer billing cycles and locked-in contracts for power signed by utilities when prices peaked last year.

The re-regulation bill is unlikely to effect electricity rates in the short term, since it can take years to build a power plant and any new plants are likely to produce a fraction of the state's electricity load. But politically the vote makes a statement.

The energy industry, led by Baltimore-based Constellation, has heavily lobbied lawmakers to defeat the bill. The Retail Energy Supply Association, a group of suppliers fighting to enter the residential market, issued this statement from state chair Leah Gibbons.

"RESA is very disappointed that the committeee decided to take a step backwards for Maryland electricity consumers. Re-regulation... will end choice for residential and small commercial customers."

Middleton and other supporters of the legislation argue that RESA's members have had years to enter the market.

The Senate is now taking up the legislation. Its chances for passage are better there than in the House of Delegates, where members of the Economic Matters Committee have expressed skepticism about passing it this year.