So much for deregulation?
Nine years ago, state lawmakers reached an agreement to deregulate Maryland’s electricity market in hopes that market dynamics would encourage the construction of new capacity.
But state regulators for months have pointed to a storm on Maryland’s energy horizon: the potential for electricity shortages and rolling blackouts or brownouts by 2011.
Earlier this month, they asked investor-owned utilities to try to define the scope of the problem and come up with solutions.
The ultimate result may be an order from the state’s Public Service Commission to those companies to seek new electricity capacity.
“What we’ve said to everyone, what the governor has said, is that we’re not going to sit around and wait for the markets to deliver what we need,” PSC Chairman Doug Nazarian said. “The theory was that markets would deliver energy, and that hasn’t happened.”
PJM Interconnect, operators of the electricity grid that includes Maryland, said last year that any delays to two key power transmission lines into the state could cause an energy shortfall by 2011.
After a May auction for additional capacity, the PSC asked PJM to update its figures, Nazarian said, leading to its Aug. 13 order to utility companies to examine the problem.
But the state’s order comes too soon, said Mark Case, Baltimore Gas and Electric Co. senior vice president of strategy and regulatory affairs. Recent auctions have succeeded in adding capacity, he said, and efforts to build the power transmission lines have largely moved forward.
Case said BGE has asked PJM to further update its projections in response to the order. Even if a shortfall is still projected, the PSC’s order would only require utilities to buy additional electricity — still a free-market-based solution, he said, rather than an example of full regulation.
“We really need to see what comes out of this next [PJM] update,” Case said. “But I would say the circumstances are looking much better than they did a year ago, and even then, they weren’t looking that dire.”
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