Dear
Friend,
The
high cost of electricity continues to be a concern for all Marylanders.
During the special legislative session next week, I hope that we will
tackle the issue head on and develop meaningful strategies for reducing
these high costs. The following op-ed
ran in today’s Gazette and outlines some of my thoughts
on how the legislature should proceed.
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Pulling the
plug on higher electric rates
Friday,
June 9, 2006
by Brian E. Frosh
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.
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