PSC report lays out electric industry re-regulation options

A report released by the Maryland Public Service Commission late Monday calls for re-regulation of the state's electric industry, a move that could cost the state and ratepayers more in the future.
The study of the impacts of possible re-regulation, put together by Kay Scholer LLP, Levitan & Associates Inc., and Semcas Consulting Associates, was requested by state legislators during the 2007 regular session earlier this year.
Maryland deregulated its electric industry in 1999 in the hopes it would generate competition within the market and lower energy costs. But instead ratepayers have continued to see rising costs; rates by Baltimore Gas and Electric customers jumped 50 percent this summer.
The study presented five potential re-regulation options:
1. A full return to a regulated industry.
The state would have direct control over power production. The state could also construct new power generation sources to meet Maryland's needs. Constructing new generation plants could cost the state $18 to $24 billion. While this would help protect ratepayers from future market swings, it would also increase the immediate costs and risks to the state and the consumer, the report says.
2. The state could require utility companies to enter long-term contracts with new generation developers and use incentives to lower costs.
This move could help diversify Maryland's power sources, add low cost resources and stabilize and moderate retail prices for an extended period. The option could also help improve competition and lower wholesale market prices, according to the report.
3. The state could create an independent power authority to manage the state's energy programs.
4. The state could beef up the resource planning role it previously played under regulation.
This move would allow the state to direct new construction of power sources and form a unified plan.
5. The state could get more involved with the federal electricity market by constructing new power plants that could impact market prices.
In the report consultants said no one method would ease the state's rising energy costs. While ratepayers may not see immediate relief, they could see long-term benefits.
The study also looked at similar deregulation and re-regulation actions in Connecticut, Delaware, New Jersey and Illinois.
In a second report released by the Maryland Public Service Commission Monday, consultants also recommended the construction of a new nuclear reactor at BGE's Calvert Cliffs plant in Southern Maryland.
credited by: bizjournals.com