Del. Impallaria: Annapolis Update #8 – Energy and Re-regulation – Apr. 8, 2009

The following was received from the office of Del. Rick Impallaria:

ENERGY & RE-REGULATION. SB 844 and HB 1530, dealing with re-regulation of Maryland utilities, are now in my committee, Economic Matters. I have always been a strong supporter of regulated monopolies. Experience has proven that de-regulation is a failure for most Maryland consumers, and now the evil geniuses in the General Assembly are pushing a re-regulation bill which appears to me to be a tax on all utility users in the State. And the State has no plan for the future progress of re-regulation. The bill has come to our committee with little time for review of its merits (or lack of them), or for making changes. This is like a re-run of the situation in 1999 when de-regulation was passed — just take our word for it that this is best. Fortunately, I have been on the Public Utilities Subcommittee for seven years, so I have a clear understanding of what this bill could do.

SB 844/HB 1530 creates a two-tiered energy plan, one regulated and one deregulated. The regulated plan does not exist at this time, and would have to be created by building a new power plant. Nothing in this bill mentions taking over existing power plants. The bill does not specify what type of power plant should be built. However, knowing that the Governor supports only the most ineffective and least productive ways of producing energy (wind and solar), I am not confident that this bill would help our energy situation. Wind and solar produce only 1% (one percent) of our energy needs. If the public is to be asked to invest in our energy future, we should be investing in the most productive and cost-effective — nuclear and coal.

The Governor’s spokesman, Mr. Fox, stated that the reason energy costs had gone up was due to the rising cost of coal. This is not the whole story. The reason energy prices have gone up is because of a government regulation and environmental legislation. Forcing coal-fired plants to add scrubbers decreases the productivity and drives up the cost. The final nail in the coffin is forcing them to buy European coal, which has to be shipped across the ocean, at much higher transportation cost than U.S. coal. The price of Maryland coal has not gone up — we just aren’t allowed to burn it any more.

I could support a two-tiered re-regulated/de-regulated policy if the PSC came to us with a clear-cut plan, where we would know exactly what type of plant is to be built, what territory it would serve, who was going to manage it, who is going to pay for it, what the return on the investment would be, and how it would affect the ratepayers over the short and the long term. No bill offered this session does this. Instead, we are being asked to write a blank check, stripping the General Assembly, your elected officials, of future oversight of the process, which we will only learn of as they move forward.

There are two reasons why utility rates have gone through the roof. As I mentioned already, one is over-regulation by the federal government and environmental laws at every level – federal, state, and local. The second is mismanagement and corporate greed — investing in the commodity markets like drunken sailors and looking to make a quick return on their money, rather than looking at the long-term good of stockholders, ratepayers, and the country as a whole. Energy does not need to be a complicated as the government has made it. The solutions are common-sense business solutions. Government can’t even run government — it sure can’t run business.