Questions of costs, jobs and influence surround O'Malley's offshore wind proposal

Washington Post Staff Writers
Wednesday, March 2, 2011; 11:25 PM

Maryland Gov. Martin O'Malley on Thursday will ask lawmakers to support a proposal to raise almost every state resident's electric bill for the next 20 years to underwrite a plan for Maryland to generate some of the nation's first offshore wind power.

O'Malley's legislation runs counter to a campaign promise to lower ratepayer costs that helped propel him to the governor's mansion five years ago, as well as repeated efforts since then to cast himself as a fighter for lower residential energy prices.

But if he succeeds, O'Malley (D) could produce a high-profile environmental achievement in his second term and secure his place as a national leader on green energy.

His plan would attempt to make the state's first proposed offshore wind project - a $1.5 billion field of giant turbines about 111/2 miles off Ocean City - attractive to investors and developers. It would require Maryland utilities to buy power from the wind farm at a price far above the current market rate and at which its developers agree they could turn a profit.

According to the governor's office, the cost of the subsidy would be spread among all Maryland electric customers in the form of monthly surcharges. The fee has been estimated at $1.44 a month for residential customers, but an analysis released by legislative budget analysts Wednesday night pegged the initial fee at $3.61 a month. For the state's largest industrial power users, the surcharges would add up to tens of thousands of dollars a month.

O'Malley's hope is that with similar projects being launched in Delaware, Massachusetts, New Jersey and Rhode Island, the surcharges will eventually disappear as the industry matures. His plan assumes, as do federal projections, that the industry will mature within a decade or two and that its prices will become competitive with those of coal and gas. Along the way, studies suggest, the effort would spawn thousands of construction, manufacturing and other blue-collar jobs not easily sent overseas.

But in Annapolis, several members of a committee that regulates utilities said they are reluctant to force any new fees on customers this year.

Most members of the House Economic Matters Committee, which is scheduled to hear testimony from O'Malley about the plan Thursday, said they are primarily interested in the plan's costs to ratepayers, its assumptions about job creation and concerns that political influence might have affected the way the bill was drafted.

Several committee members said close ties between O'Malley and one of the project's potential developers has raised eyebrows and needs to be understood fully.

The governor's former chief of staff, Michael R. Enright, a friend since high school, is managing director of an energy company that has paired with a Virginia firm to try to win federal leases needed to develop all of Maryland's offshore wind areas.

"I've been contacted by industries that want a similar setup because they would like to build generation in the state too," said Del. Jeannie Haddaway-Riccio (R-Talbot), a committee member. "But they're not getting subsidies and mandated power-purchasing agreements. They feel like biomass or solar might be just as important as wind."

Committee Chairman Del. Dereck E. Davis (D-Prince George's), who has sparred with the governor over energy policy, said he supports the governor's plan generally but is conflicted about imposing costs on consumers.

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