By MEGAN MILLER
ROCKVILLE (March 11, 2009)—For some Maryland utility customers, environmentally friendly wind-powered electricity is available at a lower cost than standard coal electricity, at least for now.
Clean Currents, a company offering wind electricity within Baltimore Gas & Electric and Pepco service areas, announced Wednesday that the cost of its "greener" electricity is now lower for some customers than the cost of standard stuff from the utilities.
"As far as I know, this is the first time you can sign up for wind power below utility rates in Maryland," said Gary Skulnik, the company's president and co-founder. Clean Currents buys its wind power from wind farms in several other states, including Texas.
Clean Currents' most competitive offerings are its 50 percent wind options, called Chesapeake Green. It's a half-and-half mixture of wind energy purchased from wind farms nationally and standard electricity from the regional grid. Clean Currents offers one year of Chesapeake Green to BGE customers for 11.1 cents per kilowatt hour, which includes the transmission fee.
The current rate for BGE's coal electricity is 11.81 cents per kilowatt hour, including the transmission fee.
Many retail energy suppliers are able to offer customers lower electricity rates than larger utilities because of differences in the ways they purchase their electricity, said Leah Gibbons, Maryland chairwoman for the Retail Energy Supply Association.
Large utility companies such as BGE and Pepco purchase their electricity through long-term contracts bought on the open market.
"We are locked into specific times when we go out into the market to purchase power," explained BGE spokeswoman Linda Foy.
The utilities then charge their customers rates based on the price they paid for the electricity, and customers are locked into those rates for the contract term, no matter how the market changes.
"Retail suppliers aren't in that situation. They go out and buy power when they sign up the customer," Gibbons said.
Utility rates have been on the rise since Maryland struck its deregulation deal in 1999. BGE, for example, increased rates by 72 percent when rate caps were lifted after deregulation in 2006, according to published reports.
But since last summer, power prices have come down. Now retail suppliers like Clean Currents can offer lower prices that reflect the market situation, while customers of the utilities are stuck with a higher rate from the time when electricity was more expensive.
Gibbons said one of the major problems causing these scenarios is the requirement that customers sign long-term contracts.
"You sign this contract, so when prices go up, customers are paying below-market prices. That sounds good, but when those contracts end, bam! You face the rate shock," Gibbons said. "Alternatively, the case we have right now is you sign a long-term contract, and prices go down. And customers feel like they're getting a bad deal, because prices are actually lower than what they're paying."
Clean Currents is requiring BGE and Pepco customers who switch to sign one- or two-year contracts to lock in current rates.
Skulnik said there's no way to be certain how long wind power will remain cheaper than the standard stuff.
"I view this as a unique window. This window could be a month, three months, six months. It's best for customers to lock in the rate now."
Capital News Service contributed to this report.