During the past decade, we have seen unprecedented changes in the regulation and operation of the electric industry, at the wholesale level and here in Maryland.
Until 1999, the regulated electric utilities in Maryland were responsible for providing intra-state transmission, distribution and supply services to all electric customers in Maryland. In response to Congressional and federal agency encouragement of competition in electricity markets, and as part of a wave of state adoption of electric deregulation laws, the Maryland General Assembly passed the “Electric Customer Choice and Competition Act of 1999.” As a result, the electric utilities were required to sell or transfer their generating facilities to competitive companies. The electric utilities maintain responsibility for operating the infrastructure (the “wires”) to deliver the electricity to our businesses and homes, and provide an electricity supply service (“Standard Offer Service” or “SOS”) to customers. However, the supply no longer comes from generating facilities owned by the utilities. Instead, the utilities purchase electricity for residential and small commercial customers through a bid solicitation process subject to review and approval by the MD Public Service Commission (PSC).
While prices in the wholesale markets were relatively stable in the first few years of the decade, and price freezes were in place for residential customers, experienced a significant increase in wholesale prices in the second half of the decade. Price freezes, negotiated as part of complex settlements, began to expire in 2004 for residential customers in the utility services areas. By 2006, when the price freeze expired for the residential customers of BGE (over one-half of all residential customers in Maryland), most residential customers became subject to dramatic (over 70%) increases in the cost of electricity when compared to the beginning of the decade. While wholesale (and now retail) supply prices have declined since 2010, the overall cost of electricity supply remains higher than in the first half of the decade.
Since 2000, residential customers have had the option of purchasing electricity from retail electricity suppliers. These companies must be licensed by the MD PSC and are subject to the State of Maryland and MD PSC consumer protection rules. By October 2011, about 21% of Maryland’s residential consumers were customers of retail electric suppliers.
With the increasingly complex nature of the electricity generating and delivery markets OPC has been in a wide variety state and federal proceedings to protect the interests of Maryland’s residential electric consumers. Our primary focus is on the affordability, reliability and quality of electricity service. To protect those consumer interests, OPC has been an advocate in numerous MD PSC cases, FERC proceedings, legislative investigations and hearings, and PJM regional stakeholder forums to address issues related to electricity procurement, distribution service and rates, and transmission needs and costs.