Invest more in new energy sources, new report says

Bill calls on PSC to weigh alternatives to long-term contracts

Long-term contracts with electricity generators such as Pepco or Baltimore Gas and Electric could require the companies to take a certain percentage of their energy supply from a certain plant for a certain number of years. Such a contract ‘‘draws in investors, but ratepayers are at the mercy of the utility,” said Garagiola (D-Dist. 15) of Germantown.

The bill, heard by the Senate Finance Committee on March 19, would require the PSC to work with the Maryland Department of the Environment to study the environmental effects and the short- and long-term expenses to electricity customers of long-term contracts. It would also require the agencies to consider whether a rate increase would result after ending a long-term contract.

If Maryland does not increase its generating capacity, the state could experience rolling brownouts as early as 2011. That has led lawmakers to consider a number of energy bills this year.

The OPC report’s findings caution against short-term contracts.

Short-term market-priced contracts expose consumers to excessive costs and risks, said the report, which was released last week. Potential savings from purchasing electricity in the short term at market price are too small to risk a likely price increase, it said.

The report also found that customers benefit from the procurement of clean resources because clean resources such as wind energy and increasing energy efficiency costs less than buying power at market rates.

In addition, the report found that by diversifying its energy portfolio, the state can lower costs and mitigate risks for residential customers.

The OPC is an independent state agency that represents residential customers of regulated utilities before the Public Service Commission, state and federal agencies and in court.

‘‘We need to take control of the process for acquiring electricity resources for the benefit of residential customers,” People’s Counsel Paula M. Carmody said in a statement. ‘‘The Report gives us a framework to focus the procurement approach on balancing costs and stability as required by current law. OPC is optimistic that the Report will be given serious consideration in our planning for future power procurement.”

Read the report

Go to www.opc.state.md.us.