Power prices, predicted shortage spur proposal

O'Malley plan would partially reregulate utilities

Wednesday, March 4, 2009

ANNAPOLIS — Gov. Martin O'Malley proposed Monday a partial reregulation of the state's electricity markets in an attempt to stabilize prices and prevent power outages in the future.

"We are going to make our own future, and we are going to seize our own destiny," O'Malley said at a State House news conference.

O'Malley (D) will introduce legislation that has three parts:

- Reregulation of new electricity supply, when it is in the best interest of consumers.

- The Public Service Commission would decide when new energy supplies are needed.

- The PSC will be able to direct utility companies to build new plants.

In 1999, the General Assembly approved electricity deregulation as a means to allow markets to decide when to build new plants and what the rates should be.

As the new policies were enacted, the state forced the companies to cap their residential rates initially.

When the caps started coming off in 2006, years of energy price hikes forced the electricity rates up, sending sticker shock throughout the state and giving O'Malley, then mayor of Baltimore, a campaign issue in the gubernatorial election.

At the press conference, O'Malley claimed companies were not building new power plants because they could not justify the expense to stockholders, even though the extra supply would drive down costs for consumers.

Malcolm Woolf, director of the Maryland Energy Administration, said the proposal could affect a site in Frederick County on the Eastalco property in Buckeystown, where Sempra Energy got a license to build a natural, gas-powered, electricity-generating station.

The governor called the market-based policies dysfunctional and termed his proposals a "rational reregulation."

Several lawmakers have submitted their own reregulation bills.

It's unclear what effect the governor's proposal will have on them.

Senate Finance Chairman Thomas "Mac" Middleton (D-Charles), who has proposed a more gradual shift toward reregulation, said this year may be the last bite at the apple for the legislature to consider reregulation. "This is the year we've got to either fish or cut bait," he said.

Staff writer Alan Brody contributed to this report.

dtallman@gazette.net