As hearings on Baltimore Gas and Electric?s pending 50 percent rate increase, which is scheduled for June 1, begin to wind down, experts have suggested discarding the state?s current standard offer service in favor of a portfolio management system and have recommended construction of a state-run power plant.
On Tuesday, the panel heard from another energy consultant who advocated that the state scrap the current system in favor of a managed approach similar to a mutual fund.
“The proposed 74 percent rate hike by BGE is not acceptable and is very troubling,” said Jonathan Wallach, vice president of Resource Insight Inc., referring to the utility?s total planned rate increase. “But it is the outcome of a process approved by former members of the PSC. It was a different environment back then; we got the best [settlement agreement] we could get given the environment of that time.”
Wallach said he felt in hindsight that the 1999 settlement agreement with the utility was “contrary to the public interest.” Wallach was testifying on behalf of the state?s Office of the People?s Counsel.
“If I were king of the universe, I would have thought first about not deregulating the function at all,” Wallach told the panel.
Wallach?s testimony supported earlier testimony by South River consultant John “Skip” Trimble, who told the PSC he thought Maryland consumers would be better served by a portfolio management approach.
“I think going forward a managed portfolio [system] is the way to go,” Wallach told the PSC. However, unlike Trimble, Wallach suggested Maryland use a mix of purchase strategies and consider building a generator to augment its supply.
One thing is clear: The commission?s task is formidable.
PSC members will have to strike a balance between the current offering of higher prices and reduced market volatility in the SOS system, in which consumers can expect high but fairly stable prices, and a managed portfolio, which could offer lower prices but be subject to market disturbances, Wallach said.
