O’Malley to try again for offshore wind development

Rather, to ensure that developers can turn a profit, the state’s Public Service Commission, which regulates utilities, would set up a kind of commodities market. The electricity created from offshore wind would be sold at competitive prices. But the energy would also come with renewable-energy credits. The credits are needed by the state’s power generators to meet Maryland guidelines requiring them to obtain a growing share of their power from wind, solar and other renewable sources. The price of the credits would fluctuate in tandem with market rates to ensure that offshore wind producers can continuously count on a stable profit.

The model is one that Republican Gov. Chris Christie has backed in New Jersey, but Maryland’s version would come with an explicit requirement that the cost of the credits add no more than the $2 a month to residents’ bills.

Personal Post

Live: Vietnam Memorial

link

Although the arrangement is highly complicated, Maryland lawmakers are familiar and more comfortable with it. The state has a similar renewable energy credit requirement that subsidizes solar power generation, albeit at a much smaller cost to ratepayers.

A potential downside of the system for ratepayers is that unlike O’Malley’s plan last year, which would have added a line-item fee on residents’ monthly bills for offshore wind, the credits would be built into the base electric rates customers pay.

If solar is any example, that means it could be nearly impossible for residents to calculate the cost of the subsidy.

Although O’Malley’s bill would mandate that the cost be no more than $2 per month, that per-household price would have to be estimated up front on a 20-year prediction of future energy prices — a term twice as long as the state’s Public Service Commission typically forecasts.

If the commission’s estimate is wrong, the subsidy for wind could be much higher or lower.

“We could look like geniuses, or people could experience the price more” than $2, said one administration official, who spoke on the condition of anonymity to freely discuss the governor’s proposal.

Senate Republican leader E.J. Pipkin (Cecil) said lawmakers and the public should have no faith that the price of offshore wind would be limited to $2. He said the PSC — which is controlled by O’Malley appointees, including two who lobbied for offshore wind last year — could not objectively analyze the costs and benefits of offshore wind.

“The governor can’t come in the front door with this because when you analyze the details, it doesn’t work,” Pipkin said. “This is a back-door approach, punting the details to the PSC, which the governor has stacked with lobbyists for offshore wind.”

Mike Tidwell, director of the Chesapeake Climate Action Network, who has rallied grass-roots support for offshore wind in Maryland, said there is a more pressing question lawmakers must answer: The General Assembly has passed a law mandating that the state increase its reliance on renewable energy, and the only way it can meet that goal is to approve offshore wind.

“We don’t have enough open space for land-based wind, we’re not sunny Arizona,” he said. “Either we repeal the . . . law, and lose the quality jobs that would come with it, or we develop offshore wind. It’s that straightforward.”