Pulling the plug on higher electric rates

Friday, June 9, 2006

Summer hasn’t officially begun but state elected officials are already feeling the heat as homeowners brace for soaring electricity bills.

With a special legislative session assured, the General Assembly will focus on mitigating or rolling back looming electricity rate hikes and on reforming the utility-friendly Maryland Public Service Commission, which has failed its basic obligation of protecting state consumers.

But we also have to look down the road and come up with long-term strategies to bring down the cost of electricity.

As first steps we should adopt two proven cost-cutting energy strategies: reduce demand for electricity and use the leverage of community-wide purchasing to reduce the cost of the power to consumers.

The rate of growth in electricity consumption nearly tripled for residential customers in Maryland between 1998 and 2004. We can’t afford to stand by and watch that rate continue. Like other states, we should invest in energy conservation programs.

Legislation I have proposed in Annapolis would require Pepco, Baltimore Gas and Electric and other power companies to implement conservation programs if the programs will save more in energy expenses than they cost to run. Electric distribution companies would be required to seek bids on energy-conservation proposals at the same time they seek bids from electricity generators.

Programs that provide rebates to people who purchase energy-saving lighting or appliances, refurbish buildings to make them more energy efficient, or take any one of a number of other steps to cut consumption can save energy and reduce pollution at the same time they lower consumers’ bills.

As a starting point, the state could set a modest goal of achieving 1 percent annual savings in electricity through these conservation measures. That doesn’t sound like a lot. But the results would be cumulative. The energy-efficiency improvements implemented the first year would reap savings not just the first year, but for years to come. The next year, another 1 percent savings would be achieved, and so on.

The program would be especially good at leveling out demand spikes that drive up prices. According to one analysis, such an approach would save Maryland consumers $700 million over a decade.

Secondly, there is an even more straightforward way to bring down the cost of electricity for residential users, through community-wide bulk purchasing, known as aggregation.

Legislation introduced by Sen. Leo E. Green would allow counties and municipalities to negotiate electricity prices on behalf of all their residents. Anyone who didn’t want to be a part of the program could choose to opt out and continue to purchase electricity on his or her own.

Several other states have given local officials this kind of leverage, with good effect. In Ohio, for example, consumers have saved significantly on their electricity bills thanks to aggregation.

Over the past months, Maryland’s political leaders have focused almost entirely on staving off pending rates increases. That’s understandable given the pain rate hikes stand poised to inflict.

But the only way to keep the current situation from replaying endlessly into the future is through long-term planning that will restore to consumers a measure of control over their energy expenditures. The present rate problem shouldn’t blind us to that fact. Conservation and aggregation programs may not be a quick fix, but they’ll save consumers money for years to come.

Brian E. Frosh, a Democrat from Bethesda, represents District 16 in the state Senate, where he also is chairman of the Senate Judicial Proceedings Committee.