Advertisement

Rethinking deregulation

July 24, 2003

Maryland's top advocate for residential utility customers last week said that deregulation of electric power, expected to bring consumers lower prices, may actually spur increased costs when rate caps begin to expire next year. Before that happens, it's time for state lawmakers to take another look at the idea.

Michael Travieso, the Maryland People's Counsel, told the (Baltimore) Sun last week that when deregulation was passed in 1999, lawmakers expected that competition would develop, leading to lower prices.

But that didn't happen, Travieso said, and although it may sometime in the future, it probably will not be in time to prevent rate increases that will come when rate caps begin expiring in 2004. Although Allegheny Power customers' rates are capped until 2008, any legislation passed would likely be statewide.

Travieso's proposed solution would allow each county or incorporated subdivision to act as brokers, buying electricity in bulk for residents and small businesses. Such bills have been unsuccessfully introduced in the Maryland General Assembly for the past three years.

Advertisement

We see a couple of problems with Travieso's approach. The first is that it would require every county to hire or develop expertise in power purchasing, at who knows what cost.

It would also add politics to the process, tempting elected officials to cut deals with unreliable suppliers so they could say that rates hadn't gone up under their watch.

Wouldn't it make more sense for the subdivisions to act as one unit, purchasing power together? By working together, they would be able to hire experts to negotiate on their behalf and craft a system that would spare low-income customers at least part of the pain of any rate hike.

Though we differ with Travieso on some points, we agree with him that it makes sense to deal with this issue now, before higher bills start going out. When the hollering starts, lawmakers may find it difficult to resist a quick fix that will do as much damage as the rate hikes.

The Herald-Mail Articles
|
|
|