Wednesday, April 1, 2009

An effort to re-regulate Maryland‘s electricity market has come under fire from lawmakers and industry groups who say it eliminates competition, hurts businesses and does nothing to bring down skyrocketing utility bills.

“It’s not the right way to go; it’s not going to lower rates; and we should have more time to figure this all out,” said Sen. Allan Kittleman, Carroll County Republican and member of the Senate Finance Committee.

The Senate is to vote Wednesday on a bill that would allow the Maryland Public Service Commission (PSC) to direct the construction of new power plants in an effort to increase supply. The bill, favored by Gov. Martin O’Malley is part of a broader movement among lawmakers in favor of more regulated energy markets.

While the bill originally had exempted large industrial and commercial customers from re-regulation, the Senate agreed to an amendment late Monday night to make them share the cost of new construction with regulated ratepayers, such as residential customers.

Otherwise, advocates of the amendment said, residential ratepayers could bear the entire cost of building new plants while the large customers would theoretically benefit from lower market prices fostered by the state’s policy of boosting supply.

The amended bill requires the commission to impose a surcharge on large industrial and commercial businesses on power they purchase from the new plants.

“The idea is that [large industrial and commercial companies] would pay some fee for the privilege of receiving the value of the planning of the PSC,” said Sen. Delores G. Kelley, Baltimore County Democrat.

Industry representatives say that the surcharge constitutes an unfair “energy tax” and could result in a number of companies going out of business.

“Large industrials are struggling. They say it’s hard to tell what straw broke the camel’s back. But if you add enough straws it does break,” said Mike Powell, spokesman for the Maryland Industrial Group, a coalition of some of the state’s largest industrial power customers.

Smaller businesses also oppose the bill, and say it won’t lower rates.

“Rates are going to be what they’re going to be. All this bill does is give the commission a worrisome amount of authority. That’s not the way to do it,” said Tom Saquella, spokesman for the Maryland Retailers Association.

Thousands of small businesses in Maryland are already shopping for alternative suppliers of energy, and it would be unwise to “throw them back under the bus of re-regulation,” Mr. Saquella said. “That’s very unfair.”

Lawmakers who favor the bill say that large industrials who oppose paying the surcharge are being “selfish.”

“It seems kind of greedy to say that even if it benefits me, I shouldn’t have to pay for it. That’s very self-interested and they should be ashamed of themselves,” said Sen. Thomas M. Middleton, Charles Democrat and chairman of the Finance Committee.

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