ANNAPOLIS – The agency that regulates the state’s utility companies says Maryland must broaden its taxing powers for future deregulation to be a success.
The Public Service Commission told the House Environmental Matters Committee Tuesday that the state will need to begin taxing out-of-state companies when the electricity market is deregulated in July 2002.
“Because the new suppliers that are coming on won’t meet the [current] definition of a public service company, they won’t be taxed” unless the tax code is changed, said PSC General Counsel Bryan G. Moorhouse. “That creates an unlevel playing field for companies that have to pay the tax.”
It could also cost the state millions of dollars in revenue, said PSC Chairman Glenn F. Ivey. Maryland now levies a 2 percent tax on the gross revenue of utility companies regulated by the commission.
Some electric companies said the future is too hazy to make plans. A spokesman for Texas-based Enron Corp., which has opened offices in Baltimore and Rockville, said the company is still unsure about entering a deregulated market in Maryland.
“It’s a little too premature to say whether we’ll enter the market, but if it’s a structure that encourages competition and a level playing field, we will complete,” said Enron spokesman Gary Foster.
State officials decided in late 1996 to open Maryland’s electric market to competition, hoping the switch would drive down rates and improve service. Nearby states, including Pennsylvania and Delaware, had begun deregulating their markets.
The commission will begin loosening the reins of the state’s 13 power companies in 2000, allowing some competition for business to begin. Full deregulation will be in place two years later.
Ivey told the committee he needs more money to build a staff capable of handling the transition.
“We’re going to have new needs. We need to develop a differently skilled staff,” Ivey said.
State Del. Ronald A. Guns, D-Cecil, the committee’s chairman, said he would “entertain” the idea of introducing a bill upping the agency’s budget if the amount was “agreeable.”
The commission is funded by a tax levied on the utilities it regulates. While that tax is passed on to consumers, it is unclear if an increase in the commission’s budget would mean higher rates for consumers.
“There’s just not enough to speculate on here,” said Baltimore Gas & Electric Co. spokeswoman Darcel Guy. “It may be just a little too premature at this time, because there was no definitive request or commitment.”
Moorhouse said he thinks a budget hike would have little impact on consumers. “When spread around, the kind of increase they’re talking about is not a significant increase at all,” he said.
But others weren’t so sure. Potomac Electric Power Co. spokeswoman Camille Smith said consumers could see their rates increase if PEPCO is taxed more by the state. -30-