ANNAPOLIS – The proposed deregulation of Maryland’s electricity industry could have a devastating effect on environmental quality, a coalition of state environmental activists is telling state government.
“The biggest concern is that if you open the floodgate for retail competition, you’re giving an edge to low-cost competitors with lower environmental standards,” said Michael F. Hirshfield, a member of the Chesapeake Bay Foundation.
Del. Leon G. Billings, D-Montgomery, said deregulation plans currently being studied ensure only one thing: “There will be cheaper electricity for some paid in part by environmental costs for all.” Billings called the current proposals short sighted, and without changes, he won’t support them.
The opening of the state’s electricity market to competition is currently under study by the Public Service Commission, which regulates Maryland utilities. The General Assembly asked the body to study the issue and make recommendations for the 1998 session. When and if deregulation takes effect hasn’t yet been determined.
Maryland’s deregulation study joins the exploratory efforts of over 40 other states. Six states, including neighboring Pennsylvania, have already opened their utilities markets to varying degrees of choice.
To supporters of deregulation, the relationship of the power industry with its customers is undergoing a sea-change.
“Christmas is coming and so is deregulation,” said Senate President Thomas V. Mike Miller Jr., D-Prince George’s, a leading advocate. The increasing number of deregulated states, he said, forces Maryland to do likewise to remain competitive.
“There’s no question that [deregulation] has got to be achieved,” Miller said, adding that it “is the most complex issue I’ve seen” since becoming a lawmaker. Environmental concerns, though important, must be weighed only after business and consumer-related issues are fully understood, Miller said.
Environmentalists also fear that in the pursuit of cheaper energy, business and residential power users will look only for the cheapest power available, regardless of the environmental standards of the seller.
With any power company free to compete for Maryland’s energy business, Hirshfield said, the cheapest producers — old, inefficient coal-fired plants in the Midwest — are likely to be the dirtiest.
Any increased reliance on the aged plants — many of which are exempt from today’s emissions standards — pumps more pollutants like nitrogen into the atmosphere, Hirshfield said. Those pollutants, carried east by the jet stream, rain down on the Chesapeake Bay, where the nitrogen contributes to unwanted algae growth and the conditions that helped create this summer’s Pfiesteria crisis, Hirshfield said.
One possible solution to the emissions problem, Hirshfield said, would be for the Environmental Protection Agency to enact and enforce tougher emissions standards nationwide, leveling the environmental playing field among energy producers. He added that Midwestern producers are now in a court battle with the EPA regarding emissions standards.
Deregulation of the electrical industry will also erode existing energy conservation efforts and promote more energy consumption, environmentalists said.
Today’s regulated electrical utilities like Baltimore Gas and Electric Company have programs to encourage their customers to use less energy, said Dru Schmidt-Perkins, Chesapeake Bay program director for Clean Water Action. But in a deregulated climate, conservation means lower sales. The only prudent business decision, she said, is for producers is to encourage more energy use.
Schmidt-Perkins also said that because the primary objective of deregulation is lower prices, money available for investment in renewable types of energy will dry up. “Our energy future depends on [the investment] as much as our environmental future,” she said.
Although state power suppliers support in principle the deregulation of their industry, they too have concerns about both the form and effects of potential changes.
Baltimore Gas and Electric supports some type of electricity deregulation and shares environmentalists’ concerns about the standards of out-of-state producers, said Art Slusark, the company’s director of public information.
“We believe in customer choice,” Slusark said, but want all energy producers in a deregulated climate to be held to the same environmental standards. According to Slusark, Maryland’s energy costs are about 7 cents per kilowatt hour — average compared with the rest of the nation. Driving the move toward deregulation, he said, are large companies with big electricity needs and out-of-state utilities that want those companies’ business. -30-