Governor Martin O'Malley Introduces Legislation for 'Rational Reregulation' of Energy in Maryland
ANNAPOLIS, MD (March 2, 2009) – Governor Martin O’Malley announced today the introduction of legislation that will apply a “rational reregulation” policy for energy markets in Maryland moving forward. The legislation will call for reregulation of electricity markets in Maryland moving forward when the Public Service Commission (PSC) deems it is in the best interest of consumers.
“Deregulation has failed us. Today, we announce that the days of blind faith in broken, deregulated markets are over in Maryland,” said Governor O’Malley. “We will reregulate Maryland’s electricity supply going forward whenever it is in the best interests of Maryland consumers and families. Rather than relying on the market forces that have failed to deliver for us, we’ll put those important decisions about securing our energy future into the hands of the Public Service Commission.”
Governor O’Malley, joined by Maryland Energy Administration Director Malcolm Woolf, outlined the major themes of the legislation:
- We will re-regulate Maryland’s electricity supply going forward when it is in the best interest of Maryland consumers. Currently, deregulation allows important decisions, like the construction of new power plants, to be made by energy companies when it suits their own economic interests. Governor O’Malley’s plan requires the PSC to make these decisions in the interests of consumers.
- We will give the PSC the responsibility and authority to determine when new energy generation is needed, rather than relying on broken energy markets to make the determination. These decisions will no longer be made based on the private economic interests of energy utilities, but rather on the public interest, giving the PSC more tools with which to protect consumers and greater leverage to develop renewable energy sources in Maryland.
- We will direct the establishment of new generation plants when it is determined by the PSC that an energy company is not developing a generating site due to private economic interests. Despite the urgent need for new generation, some energy companies are not building new plants, even when they have land on which to build. This legislation would grant the PSC the authority to direct the development of a plant on those sites when it is in the public interest to do so.
“The promise of deregulation – that the free market would drive energy prices down through competition – has failed the people of Maryland,” said Malcolm Woolf, Director of the Maryland Energy Administration. “Taking control of the decision making process will ensure that these important matters will be decided in the best interest of consumers.”
Governor O’Malley stressed the prohibitive cost and risk to taxpayers of returning to full, retrospective reregulation. The immediate cost of buying back the energy plants from private utilities would be passed on to consumers, thus having an increasing effect on utility bills. In addition, $1.5 billion of the $2 billion settlement won by the State from Constellation Energy would be lost, since returning Constellation’s nuclear power plants would return to ratepayers the cost of decommissioning them. Buying back these plants could also jeopardize the development of Calvert Cliffs 3 and the thousands of jobs it will create.
In August, Governor O’Malley delivered the keynote address before the Maryland Association of Counties, and pledged to do everything within his power to fight for Maryland families who are struggling to afford out-of-control home energy bills. There, the Governor outlined policy to secure Maryland’s energy future, including the use of the Public Service Commission to direct utilities to either find or build new generation to address any future supply shortfalls that the market is not reasonably expected to deliver in time to keep the lights on in 2011, 2012, and the years that follow.
