Hype About Electric Deregulation Never Came True

October 21, 2007
Capital News Service
Kate Prahlad

The average consumer saw a 72 percent spike in electricity bills in June 2006, but fewer than 3 percent of residential customers are shopping for a better rate, according to the Office of the People's Counsel.

The situation is precisely the opposite of what 1999 utility industry deregulation legislation was intended to achieve, said advocates Friday.

"As you get older, you go to bed earlier, and you're using less electricity," said Rosalee Walker, who has seen the electric bill in her Baltimore condo soar. "So why am I paying more?"

Walker voiced her concerns at a listening session hosted by AARP, which is working with the Office of People's Counsel to identify policies that could help lower rates and increase market competition. Those recommendations will be submitted to the Public Service Commission on Oct. 31.

Former PSC commissioner J. Joseph "Max" Curran, who is now a utilities attorney, told the audience at Friday's meeting that the commission erred in not preparing consumers well enough for the spikes they would inevitably see.

"They didn't build enough of a transition for you all, to prepare you all for higher rates," Curran said.

He said the agency tries to find price stability and reliability for consumers, as well as sources and incentives for renewable energy generation.

Those "were all the things we were promised that deregulation would do, that it would all be taken care of by the magic hand of the market," said Barbara Alexander, a private practice consumer consultant. "It didn't turn out that way."

The PSC, under current Chairman Steven Larsen, "is certainly being more proactive when it comes to handling customers' complaints and concerns and making sure the utilities we regulate are following regulations," said LaWanda Edwards, spokeswoman for the commission.

She said the PSC also encourages electric choice for customers and a competitive market.

But fewer than 3 percent of residential customers get electricity from an alternative retail supplier as of September 2007, said Paula Carmody, head of the Office of the People's Counsel.

"That means 97 percent of people are still getting their power from Delmarva, Pepco and BGE," she said.

Along with deregulation, the state imposed rate caps which expired in 2006 for BGE. But Curran called the caps a "pro-consumer idea that turned out to be a disadvantage," because they only dampened investment in critical infrastructure, halting the building of new transmission lines and base-load generation.

He said that could mean trouble in the future, as electricity demand is expected to increase by 20 percent by 2030.

Carmody said "re-regulation" will not solve the problem, but the rate problem "is on the radar of the PSC and the General Assembly, to look at the question of what deregulation has done."

Others are taking measures into their own hands.

Leo Burroughs Jr., chairman of the Maryland Coalition to Stop the BGE Rate Hike, has organized a protest outside Baltimore Mayor Sheila Dixon's house today. He said Dixon has been reluctant to support special session initiatives to "redress the wrong inflicted upon the people of the city and state."

"It's off the chain," he said, referring to electricity rates. "We are being enslaved by Constellation and the political establishment is aiding and abetting...We're not being protected."

But consumers will still have to wait, and pay, while alternatives are researched.

"There's no magic bullet," Alexander said.

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