Straight Talk on Electricity Rates

Commentary by Ron Miller

Commentary by Ron MillerA few months ago, a group of angry citizens converged on a town hall in North Beach to express their frustration with rising electricity rates, and the Baltimore Gas and Electric (BGE) representatives in attendance were blindsided by the hostility emanating from the crowd. Local politicians emerged from the meeting demanding satisfaction from BGE. Their statements so irritated me that I warned the residents of the Twin Beaches in the local paper not to expect miracles from our elected officials.

As the next election approaches, Governor O'Malley is bludgeoning BGE and Constellation, BGE's energy provider. He and other self-serving politicians are prepared to wreck the state's electric utilities for their own benefit, and we're the only ones who can stop them. I can understand why the average citizen is confused by the blizzard of words coming out of Annapolis on this topic. This is an attempt to simplify the issue so everyone grasps it, because it is vitally important that we do so.

Let's begin in 1999, when the General Assembly passed and then-Governor Paris Glendening signed the Electric Utility Industry Restructuring Act. The centerpiece of this legislation was the decoupling of energy providers from power suppliers, with the idea that suppliers would have the option to buy energy wherever they found the best price rather than producing it themselves. The theory was that, given the flexibility of buying the cheapest energy available and divesting themselves of the responsibility for production, the power suppliers' costs would go down and so would consumer electric bills. The bill also gave consumers the option of choosing their own power supplier from a list of suppliers, another approach to fostering competition in service delivery and price.

The supporters of this legislation were extremely confident that it would lower electricity rates. Senator Thomas V. "Mike" Miller declared, "Prices will go down, no ifs, ands or buts."

Despite their confidence, however, the General Assembly decided to cap electricity rates for a period of time; in the case of BGE, the cap was in effect for six years. These caps made Maryland electricity rates artificially low compared to other power suppliers who purchased energy at prevailing market rates and charged their customers accordingly. The rate caps frightened other power suppliers away from Maryland because their market-based rates couldn't compete with the capped rates.

The cap, upon expiration, also resulted in an unpleasant surprise for consumers. During the six years the cap was in effect, the costs of natural gas, oil and coal soared, and when the cap was lifted, BGE customers were hit with a 72 percent rate hike to bring them in line with the prevailing costs of energy. BGE received no compensation for the losses it took during the six years it provided energy below cost.

Nonetheless, the rate increase became a signature issue during the 2006 gubernatorial campaign, and Martin O'Malley won on a promise to do something about it.

What did he do? He impugned the integrity of the Public Service Commission (PSC) under Governor Ehrlich. He criticized his opponent for the effects of legislation passed while Ehrlich was a U.S. Congressman and nowhere near Annapolis. Beyond that, he did practically nothing. His PSC concluded there was nothing they could do to prevent the rate increase, and O'Malley scrambled to eke out a one-time rebate for BGE customers in order to save face.

Currently, he's using the PSC to claim oversight of a minority investment in Constellation by Electricite de France when the law clearly states they have no jurisdiction. If the chief executive of the state can disregard the law at will in order to punish a company he dislikes, what else follows?

Here's the bottom line; unless Governor O'Malley can move the global energy market with a wave of his hand, he can't do anything about your electricity bill. Reregulation will actually make costs higher because the power suppliers would assume the costs and risks of building, owning and operating their own power plants, and the costs will be passed on to the consumers. Forcing BGE to artificially suppress their rates wouldn't reflect market realities and would quickly drive them out of the electricity business altogether.

The best bet is for Maryland to lower regulatory barriers and bring more electric utilities into the state, giving consumers more choices. On an individual level, have an electricity audit done on your home so you can learn how to better conserve energy in your home, then put their recommendations into practice. You don't need a politician for that.

Finally, demand straight talk from your elected officials when they make promises we know they can't keep. They should respect you enough to tell the truth.

Ron Miller, of Huntingtown, is a conservative blogger and activist, former and future candidate for the Maryland Senate, and communications director for the Calvert County Republican Party. Ron is a regular contributor to,, and You can also follow Ron on his website, as well as Twitter and Facebook.

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