Position: FAVORABLE
Producing energy carries high environmental costs as well as high costs to consumers of electricity. It is prudent to use this important resource wisely, especially in light of local and national trends in the electric market.
The future of electricity costs looks anything but rosy for consumers. In the United States, average residential rates increased in 2001 for the first time in nearly 20 years and increased in 2003 as well. System reliability problems have been on a steady upward trajectory. In Maryland, rate caps that had shielded consumers from price volatility came off last summer for over 1.2 million customers, resulting in a dramatic rate increase which consumers are still not facing the full brunt of. Demand for electricity is increasing and the massive investments in transmission capacity or new generation proposed by many in the electric industry could saddle consumers with higher rates for years, if not decades, to come.
Maryland used to lead the country in energy efficiency programs, investing $13 per person in energy efficiency programs annually. After Maryland restructured its electric utility industry in 1999, all of the efficiency programs were halted by Maryland’s major utilities, and we currently invest less than $1 per person annually in reducing our collective energy use. As a result, our yearly increase in demand for electricity tripled from a modest 0.8% annual growth rate from 1992 through 1998 to a 2.4% annual growth rate from 1998 through 2004. This unchecked demand for electricity leaves us vulnerable to spikes in electric prices, could leave consumers paying high costs for new transmission or generating capacity and could lead to supply shortfalls in the coming years.
The good news is that we don’t need to build new transmission lines or power plants to meet our energy needs. Virtually every aspect of our lives has the potential to be more energy efficient— often in ways that not only reduce pollution, but that save money as well.
SB 562 is a powerful step that will decrease our demand for new electricity. If passed, ten years from now we will have reduced our energy usage by 12 percent of 2006 levels, and the electricity saved in 2016 alone will be enough to supply over 200,000 typical Maryland households.
SB 562 accomplishes these savings by requiring all regulated utilities to invest in energy saving measures that save about 1 % of residential sales each year for each of the next 10 years. It would also remove financial disincentives for electric companies to save energy, by decoupling the utility’s profits from the amount of energy sold.
SB 562 gives the regulated utilities discretion to implement the programs that will help them reach the specific targets and timetables for implementation best.
This legislation is good for the environment and good for consumers and Maryland PIRG urges the committee to issue a favorable report on SB 562.
