- The Washington Times - Tuesday, June 3, 2008

BALTIMORE (AP) | The District, Maryland and other Mid-Atlantic state regulators have filed a complaint with the federal government against a regional transmission company, arguing that auctions for electricity resulted in unreasonably inflated prices.

Regulators from Maryland, New Jersey, Pennsylvania and Delaware filed the complaint Friday with the Federal Energy Regulatory Commission. The complaint is against PJM Interconnection, a regional transmission organization that supplies power in 13 states and the District.

The complaint relates to auctions held in 2007 and 2008 to set the price of electricity from June 2008 through May 2011. Regulators say the auctions were not competitive, enabling existing power generators to get unfairly high prices instead of creating new generation as intended.

Chairman Steven Larsen, of Maryland’s Public Service Commission (PSC), said there is no evidence that PJM broke regulations, but he thinks the rules set up “perverse financial incentives for the generators.”

While the rules for the grid’s pricing models were drafted to give financial incentives for creating new generation, that never happened, Mr. Larsen and other regulators say.

“We’ve concluded that those were unjust and unreasonable rates,” Mr. Larsen said in a teleconference Monday with reporters announcing the complaint.

The complaint estimates that electricity users in PJM’s region will pay about $12 billion in “unjust and unreasonable” capacity charges over the next three years. Maryland’s share adds up to an estimated $2 billion for energy purchases over the next three years.

By filing the complaint, the regulators are hoping that FERC will order relief to consumers in the affected states.

It’s the fourth time this year that the Maryland PSC has taken action in the wholesale energy market.

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