ANNAPOLIS – A legislative task force studying retail electric competition meets Thursday, but leaders of the panel concede that chances for deregulation are all but dead this year.
Despite a push by businesses eager for deregulation, many watching the issue say there are too many questions for the state to move quickly. The Public Service Commission said as much Dec. 31, when it delayed retail electric utility competition until at least July 2002.
“I’m not going to pass feel-good legislation for the business community now that takes away from residential consumers,” said Sen. Thomas L. Bromwell, D-Baltimore County and co-chairman of the joint task force. “We’ve got to make sure everyone gets a fair shake.”
Bromwell said he doesn’t want Maryland to be the first state to deregulate — or the last. Others said Maryland can afford to take its time because electricity rates here are on par with the national average.
“I think that there will be work done in Annapolis this year, whether it will result in legislation is doubtful, it’s more likely to be next year,” said People’s Counsel Michael J. Travieso, whose concerns about details of deregulation caused the PSC to pause.
Deregulation gives consumers the freedom to choose who they buy their electricity from. It is supposed to work like the breakup of the phone monopolies — the same power lines would run into the house but the juice could come either from a local utility or it could be supplied by another company of the customer’s choosing.
Competition is supposed to drive down rates. But those urging a go-slow approach were concerned with the loss of control over the utilities and the potential loss of tax revenue from current domestic providers.
“The utilities are kind of like tax collectors for Maryland,” Travieso said. “Once you deregulate and you can buy power from someone out of state, the 2 percent franchise tax could be lost.”
That, he said, gives out-of-state utilities an advantage over Maryland companies. Deregulating could also decrease the amount of tax money raised on current utility assets, like property which is taxed at a 100 percent assessment.
Bureaucrats said they also need the authority to regulate out-of-state companies, not just for tax purposes, but also for consumer complaints on service.
Finally, Travieso said, there need to be laws governing universal service programs, which let the poor purchase power at discounted rates.
It is currently illegal in Maryland to cut off power during winter months for non-payment. An $8 million fund subsidizes that universal service program and Travieso wants to make sure programs like that don’t disappear with deregulation.
Baltimore Gas and Electric Co. spokesman Art Slusark said there’s no hurry to push competition because Marylanders do not face the high rates that consumers in other states do.
In states like California and New Hampshire, rates per kilowatt hour are as high as 14 cents. Marylanders pay about the national average of 7.1 cents per kilowatt hour.
The rates represent a blended average of what commercial, industrial and residential consumers pay, so the actual residential rate is higher. That’s because it costs utilities less to provide power to industrial consumers who use about the same amount of power every day of the year.
“Residential customers use peaks and valleys,” Travieso said. “So utilities must build up their systems to accommodate even the hottest day in August.”
Industrial users in Maryland are eager for deregulation and have formed a coalition to keep pushing for competition. But even Tom Saquella of the Maryland Retailers’ Association, one of the coalition members, said this was not going to be a substantive year for deregulation legislation.
“The legislators don’t want to deal with the tax issue in the year before an election,” Saquella said. “But we’d like to see the PSC’s authority clarified.”
Del. Ronald Guns, D-Cecil and a co-chairman of the deregulation task force, said he wants to move forward on the issue but only after safeguards for residential consumers are realized.
“We shouldn’t be oblivious to potential problems,” Guns said.
“It’s fully anticipated that the private business sector will be able to negotiate lower rates. Our primary concern is to keep down residential electric rates,” he said. “We want to make sure we don’t walk away from poor or residential consumers.”
Spokesmen for the six utilities serving Maryland said they supported the go-slow approach.
“The delay will give utilities and lawmakers the time we all need to figure out what to do,” said Potomac Electric Power Co. spokesman Steve Arabia.
Del. George W. Owings III, D-Calvert and a member of the deregulation task force, said he wants to take a closer look at taxes and residential consumer benefits before acting on the issue.
“What I hope to come out of this session is a study of deregulation and full legislation that is correct,” he said. “And I want the General Assembly to understand what we’re doing and when the smoke clears, that we’ve done it right.”
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