- The Washington Times - Thursday, July 26, 2007

ANNAPOLIS — Gov. Martin O’Malley and Maryland lawmakers gathered yesterday with utility officials, nonprofits and academics to exchange ideas about how to resolve energy-conservation and power-supply concerns.

Mr. O’Malley, a Democrat, called for the summit to bring together experts to talk about reducing Maryland’s per capita energy consumption, which he hopes to reduce by 15 percent by 2015. Mr. O’Malley said other states with similar levels of growth have used energy more sparingly, and now Maryland has to focus on being more efficient.

Maryland residents have been feeling the pinch of higher energy costs. In June, a 50 percent increase went into effect for 1.1 million customers of the Baltimore Gas and Electric Co. The rate increases were the result of deregulation in 1999 that led to price caps that expired.

Mr. O’Malley vowed during his 2006 gubernatorial campaign to attempt to minimize the drastic price increases, then apologized this past spring when he failed to fulfill the promise.

The governor yesterday told the roughly 200 people in attendance there were few issues of greater importance than finding affordable, renewable and sustainable energy. He said the state is headed “on a dangerous and unsustainable path of consumption” that experts say could lead to rolling blackouts in the state as early as 2010.

The governor asked Malcolm Woolf, director of the Maryland Energy Administration, to develop an energy plan in time for the next General Assembly session with specific policy solutions for affordable, reliable and clean energy.

Mr. Woolf described the summit as a way to jump-start the development of an energy management plan, which will be acted on by executive orders from Mr. O’Malley’s office, actions by the Maryland Public Service Commission or legislation.

The summit included two panels — one addressing energy demand and a second focusing on renewable generation. On both panels, about a dozen speakers were limited to several minutes to express general thoughts on subjects.

The first panel included discussions on creating a public-benefit fund, which is created by a small fee or surcharge on electricity bills for the state to use to invest in a clean-energy supply. It also discussed requiring utilities to achieve a specified energy-efficiency target, using smart meters to give customers information about energy prices, using tax credits as incentives for investments in energy efficiencies and upgrading building codes to make buildings more energy efficient.

The also talked about “decoupling,” a conservation tool to encourage energy companies not to worry about losing money on fixed costs if customers conserve energy. The PSC voted to approve a decoupling plan for Pepco and Delmarva Power last week. Under decoupling, energy companies can change distribution rates to make up for lost money to cover fixed costs, if customers conserve more and demand for electricity drops.

The idea is to give utilities an incentive to encourage conservation.

Kathleen Hogan, of the Environmental Protection Agency, said utilities that have proper incentives for conserving energy “have been wonderful allies in delivering energy savings to their customers.”

Paula Carmody, who heads an independent state agency called the People’s Counsel that represents Maryland’s residential consumers of electricity, struck a cautionary note on decoupling, saying the concept can mean “guaranteed profits” for utilities.

In the recent rate cases in Maryland, her office advocated for a significant reduction in the return on equity for the utilities as an offset to the decoupling proposal.

“We need to be cautious about how this is done,” Miss Carmody said, adding later in an interview that her agency is still reviewing the implications of last week’s PSC decision on decoupling.

The second panel focused on using long-term power purchase contracts to develop new electricity generation, creating a tax policy to encourage new generation in the state and working with neighboring states to take on transmission congestion.

The PSC also has scheduled two days of hearings in Annapolis that will include technical experts from across the mid-Atlantic region to discuss plans for handling the state’s future electricity needs.

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