Smart Energy Solutions In the News

More than 40 organizations nationwide, including Maryland's advocate for electricity customers, have asked federal regulators to investigate "deep systemic problems" in power auctions that they say drive up residential customers' bills.

Auctions overseen by regional power grids have contributed to higher costs for residential and commercial customers, according to the filing that asks the Federal Energy Regulatory Commission to take a new look at the markets run by the PJM Interconnection and other grids. FERC is already exploring ways to reform power markets, but critics said the investigation's scope is too narrow.

"In the past year, folks are beginning to realize how consumers at the Maryland retail level are being impacted by what's happening at FERC," said People's Counsel Paula Carmody, Maryland's ratepayer advocate.

A FERC spokesman said they could not comment on an ongoing proceeding.

The letter asks the federal government to review power auctions, where generators such as Constellation Energy sell power to utilities such as Baltimore Gas and Electric Co.

While coal and nuclear power remain the cheaper options for generating power, auction prices are often set by more expensive natural gas-fired plants. Additional capacity costs are added to residential customers' monthly bills in heavily congested regions like central Maryland.

The money, administered by PJM, is meant to spur companies to build new plants, but there is no requirement about when and how generators spend that money, according to the Public Service Commission.

Those capacity-increase charges have increased to constitute more than 20 percent of the average BGE customer's bill since the charge was first assessed two years ago, according to a recent study by the PSC.

But power generators say the incentives are working, citing the number of providers investing in new plants or bringing older facilities out of mothballs. Constellation scrapped plans to retire two of its aging natural gas-fired plants until it can build newer facilities.

"It is leading generators to make the kind of investments we need to maintain reliability," said Lawrence McDonnell, a Constellation spokesman.

The letter comes after the Public Service Commission, which is Maryland's power regulator, announced it would be more aggressive in lobbying the federal commission on behalf of residential-rate payers.

"Power just doesn't happen on a state-by-state basis. We are connected to the grid," said Johanna Neumann from the Maryland Public Interest Group, which also signed the letter.

Gov. Martin O'Malley also said he has vowed to push affordable and reliable electricity to the forefront of his agenda when the General Assembly reconvenes in January. So far, he has not revealed any details of his proposals, but a Dec. 17 letter to the governor from Maryland Energy Administrator Malcolm D. Woolf warned, "There is no 'silver bullet' that will solve Maryland's energy challenges."

"Rather, the solution may be better characterized as 'silver buckshot.' A series of cumulative measures will ensure Maryland a constant supply of clean, reliable, affordable energy," Mr. Woolf wrote. "A long-term, sustainable electricity strategy necessitates reducing electricity demand, expanding new generation and improving the state's transmission capacity."