December 2, 2009

House committee seeks to boost electricity competition

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By Andy Rosen
Andy@MarylandReporter.com

The House Economic Matters Committee is moving toward legislation intended to boost electricity market competition, rather than pursuing the O’Malley administration’s plan to re-regulate the state’s electric supply industry, a proposal the committee stymied earlier this year.

The committee met Tuesday with representatives of the state’s electric supply industry. The alternative suppliers are offering lower power rates to lure customers away from the utilities that have traditionally sold them power, but say they could use help from the state.

“The biggest hurdles we face, really, are customer awareness and customer education,” said Leah Gibbons of Washington Gas Energy Services. She said the state can help better inform customers about their options, because customers could save about $200 this year by switching to the right company.

The committee may consider policy changes as well. Getting consumers to move from buying the utility’s electricity to using a competing supplier supply was a key selling point of electric deregulation when it passed in 1999, but it has been slow to materialize for smaller customers.

The bill to re-regulate supply passed the Senate last year, but the House Economic Matters rejected it. The committee is now looking to boost competition without regulating the power supply again.

Committee Chairman Dereck Davis, D-Prince George’s, said he is considering legislation that would make it easier for electric suppliers to get utility companies’ customer lists, and make it easier for the companies to get paid for their services if customers fail to pay their bills.

He said he does not personally support any major utility change this year, though he said he could not speak for the committee as a whole.

“A major overhaul, or revision, of the system is probably not the direction that I’m looking, from my perspective,” he said.

Vice Chairman David Rudolph, D-Cecil, said the fact that only 4.3 percent of residential customers that have switched suppliers is “abysmal and not acceptable.” He said companies and the state need to do a better job explaining to customers what happens if they choose an alternative supplier.

Nearly 90 percent of large industrial customers have switched electric suppliers, but residential customers have lagged. Other deregulated states, such as Connecticut and New York, have residential conversion rates that have reached the mid-teens, according to testimony before the committee.

Under deregulation, utilities such as Baltimore Gas and Electric Co. continue to own and operate transmission lines. They charge customers a state-regulated rate for the delivery of power, but ratepayers can choose a different company to sell them the power itself. So far, few customers have chosen to stray from the standard service that utilities must offer.

“There is a fear out there, and an ignorance out there at a very high level,” Rudolph said. He said many customers are concerned that their power delivery would be affected by a switch, which is not the case.

A previous version of this story said the Economic Matters Committee failed to act on the re-regulation bill. The committee voted on and rejected the bill. MarylandReporter.com regrets the error.