Delaying Deregulation Risky, Advocates Argue
By Robert E. Pierre
Legislative leaders, electric utilities and large power consumers argued yesterday that Maryland stands to lose jobs and business opportunities if the legislature fails to approve a plan to deregulate the electrical industry this year.
But their gloomy predictions were met with skepticism by Gov. Parris N. Glendening, who said that current deregulation proposals in Maryland offer too few protections for the average consumer.
"The stakes are high for businesses and other large users across the state," Glendening (D) wrote in a five-page letter to lawmakers. "But the stakes are just as high, and the future more uncertain, for the millions of Maryland -- rich, middle class, and poor -- who currently receive this basic commodity through a regulated system."
Testimony yesterday from scores of business and industry leaders during a joint legislative hearing stressed the pitfalls advocates see unless deregulation is approved this year.
Maryland's electric rates, though slightly above the national average, are moderate by regional standards. But deregulation is expected to result in lower, more attractive rates for large consumers in Pennsylvania, which already has launched competition between power companies, and two other neighboring states -- Virginia and Delaware -- that are about to do so.
"Maryland is quickly becoming an island between states that are moving forward with electric deregulation," said State Senate President Thomas V. Mike Miller Jr. (D-Prince George's). "Our chief concern is that our constituents not be robbed of lower rates."
"We are going to jeopardize some of the biggest economic engines in our state," said House Speaker Casper R. Taylor Jr. (D-Allegany), a strong proponent of deregulation.
Though the very subject -- electric deregulation -- sounds mind-numbing, it is one of the most important issues being debated during a legislative session that, as yet, has produced little controversy. And the outcome of the debate will effect everyone who pays an electric bill in Maryland. Yesterday's packed hearing offered some insight into the degree of controversy that looms ahead.
Electric deregulation is complex, and lawmakers on both sides of the issue grew testy with lobbyists who they felt were repetitive and a bit preachy.
"We know that it's good for competition," said Sen. Thomas L. Bromwell (D-Baltimore County), chairman of the Senate Finance Committee. "Folks, tell me something I don't know. That may be a lot. But tell me something I don't know."
Proposals advanced by Miller and Taylor would cap rates for four years, establish a "universal service fund" to guarantee that low-income customers get power, and ensure that regulated utilities do not receive excessive profits from selling off plants they built under the monopoly system.
And an alternative measure, proposed by two Montgomery County lawmakers, places more emphasis on protecting the environment and creating a larger cushion for the poor. One of them, Sen. Brian E. Frosh (D), said the do-it-now sentiment should not supplant lawmakers' duty to protect homeowners and the environment.
Frosh wants lawmakers to retain authority to decide initial rates and determine a fair price for generating plants sold by utilities, rather than delegating those responsibilities to the Public Service Commission.
"There are policy decisions," Frosh said. "These are decisions we should not leave to a body appointed by the governor."
Glendening sides with many legislators and consumer advocates in that there is no need to rush to deregulate. Yesterday, he suggested that lawmakers consider requiring initial rate reductions for all customers as the industry's price for deregulation. He cited as an example Delaware, where state leaders are moving forward with a electric restructuring plan that mandates a rate reduction of 7.5 percent.
"This commodity has been delivered through a regulated marketplace because electricity is a modern necessity," Glendening wrote, citing other concerns. "We cannot rely on a totally free market to protect our poor and our elderly citizens."
© Copyright 1999 The Washington Post Company