The head of the panel that regulates Maryland‘s utilities says the marketplace has failed and left increasing numbers of ratepayers unable to afford to heat their homes.
“Deregulation has not worked for the benefit of Maryland ratepayers. We have not been able, just relying purely on market forces, to achieve a supply-and-demand mix that works for the best interest of ratepayers,” Douglas R.M. Nazarian, chairman of the Public Service Commission, said during a series of hearings Thursday and Friday.
About 120,000 Maryland customers face an electricity cutoff next month because of the deep recession and bills that have doubled or even tripled this winter.
The prospect of a mass shut-off prompted the commission to evaluate the cost of reregulation bills submitted by Gov. Martin O’Malley, a Democrat, and lawmakers that would give the state broad powers to decide when power plants would be built and whether customers are being charged a fair rate.
At the hearings, lawmakers expressed doubt about turning back the clock on 10 years of deregulation.
Sen. Robert J. Garagiola, Montgomery County Democrat and a member of the Senate Finance Committee, questioned whether reregulation would be effective, and added that rates in many regulated states have increased rather than decreased.
“The concern of mine is if this legislation passes, and when economic circumstances are such that investors who want to build here, they won’t be able to do that,” Mr. Garagiola said.
Maryland deregulated its power market in 1999. Rates remained stable until 2006 because of rate caps, but once the caps were lifted, rates skyrocketed 72 percent.
Sen. Catherine E. Pugh, Baltimore City Democrat, asked whether deregulation is simply not working or just needs to be fixed. The way deregulation was implemented made it hard for companies to bring about competitive rates, she said.
“If something is broken, then we fix it,” Miss Pugh said.
Mr. Nazarian conceded that reregulation would not immediately lower rates.
“I am not saying that if we reregulate tomorrow then your prices are going to come down tomorrow; that’s not going to happen,” he said.
Meanwhile, the commission extended a deadline for customers who could see their electricity shut off next month, a plan that will be evaluated by the General Assembly in the coming days.
The special order Wednesday by the commission barred utility companies from shutting off gas and electricity after an April 1 deadline until further notice. About 84,000 customers of BGE and about 43,000 customers of Pepco who cannot pay their bills could lose heat and power after the deadline.
According to documents collected by the commission, the average gas bill for a BGE customer in November 2007, was $103.13. By January 2009 that average had increased to $209.06.
Even though they’ve done everything they can to be more energy efficient, bills are still going up, customers say.
“We’re going multiple days in the dead of winter where we just have no heat [in order to save money]. There have been some very cold days in our house,” said Paul Hassler, 65, who has lived since 1991 in his two-story Rockville home, where he raised four daughters.
Mr. Hassler said that in 2003 his Pepco bills were about $400 a month. By this year they had increased to $1,259, even though he had consumed less energy by replacing heat pumps with those purportedly more efficient.
“I am no longer going to be able to stay in my house if the electricity costs continue to spiral,” he said. “Pepco blames it on usage. I blame it on Pepco charging whatever they wish.”
Pepco representatives said in a statement that they are willing to “work constructively” with the legislature, but they are unsure whether reregulation would result in lower costs.
“It is important for customers to understand that reregulation may or may not result in savings to customers, and no one can say at this time what the result will be if the state were to reregulate,” the statement said.