ANNAPOLIS – Maryland faces “a critical shortage of electricity capacity that could force mandatory usage restrictions, such as rolling blackouts, by 2011 or 2012” unless action is taken soon, a state panel warned Tuesday.
“It is not in the public interest to wait for the market to exclusively meet Maryland needs,” said Public Service Commission Chairman Steven Larsen.
“We have seen a public outcry and a political desire to move back to regulated power,” Larsen said as he presented the commission’s report to the Senate Finance Committee.
The 45-page report said Maryland “sits in a highly congested portion of the regional electric transmission system,” which makes it hard to bring more power in, while state consumers “use more electricity than is generated here.”
Experts said solving the problem will take both new generation or transmission through long-term contracts, and a reduction in regional use, steps that need to be taken quickly.
“If we continue the status quo, that means a tight relationship between supply and demand, and prices will stay high,” said Randall Speck, with the international law firm Kaye Scholer.
But moving toward new generation and transmission is a difficult step.
Two new transmission lines are being planned in the region, but Larsen said it is a “roll of the dice” to assume that both will be in place in time to prevent a shortfall. The lines run hundreds of miles, often end up in litigation and are controversial and face opposition, he said.
PJM Interconnection, the company that runs the regional wholesale energy market, has said “both lines are critical to maintaining long-term reliability,” Larsen said. “We’re not trying to be alarmist, but that’s the frank testimony we’ve gotten.”
The Maryland electric market was deregulated in 1999 in an effort to curb electricity rates by encouraging competition among the state’s energy suppliers.
“Deregulation totally failed,” said Johanna Neumann of Maryland PIRG. “Rates have gone up, reliability has gone down.”
She called it “disturbing” that the report seemed to “just tinker with a flawed system” rather than address underlying problems.
More attention should be paid to “aggressive investing in energy efficiency” without having to build new generation plants or transmission lines, Neumann said.
But the commission emphasized the need for more than just conservation.
“It’s clear that demand management and conservation alone won’t solve the reliability gap,” Larsen said. “But we have to try and figure out the most cost-efficient ways collectively.”
“It seems to me that demand management is like asking the victim of a robbery to carry less cash,” said Sen. E.J. Pipkin, R-Cecil, a member of the Finance Committee. “In my house, that means turn the lights off.”
Constellation Energy spokesman Robert Gould called the report a “step towards restoring normalcy into the regulatory framework,” but said that Constellation “remains committed to a competitive market model.”
He noted that rates paid by Baltimore Gas and Electric customers were at or below other regional carrier prices, and that Maryland had been nationally noted for its “open auction process.”
“We have plans to expand and bring out of retirement” some generating facilities, he said. “But it takes time. You can’t flip a switch . . . and power comes out.”
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