For months, Southern Maryland governments have known the coming era of deregulated electricity would cost them dearly, as power plants' property taxes are reduced to help them adapt to a newly competitive marketplace.
Now, to help ease the pinch once deregulation starts taking hold next year, regional officials are contemplating the formation of buying cooperatives to leverage better rates on their electric bills.
Charles County commissioners on Tuesday, without taking a formal vote, accepted a staff recommendation to explore whether to form such electricity-buying alliances.
"We could go in with the Board of Education, the community college, another jurisdiction," Deputy County Administrator Victoria L. Greenfield told commissioners.
In an interview, Greenfield said county government officials had yet to approach other agencies. "We're just beginning," she said. She offered no prediction on how much money, if any, the county might save by merging its buying power with others.
Throughout Maryland, government officials are discussing whether to form power-buying alliances, said Chris Cook, assistant director for policy and planning with the Maryland Energy Administration, a state agency.
"There's a lot of people talking about it," Cook said. "School systems, counties, municipalities--all of them are looking at it."
Under electric utility deregulation approved by the General Assembly this spring, all commercial and industrial power users will be able to choose suppliers by 2001. By 2003, all residential customers will have that option.
State lawmakers agreed to reduce utilities' property tax rates, assuming they would drop their electricity prices in order to remain competitive with out-of-state power companies.
Charles and Calvert counties, each of which has a major power plant, will lose more than $8 million in property tax revenues over the next five years, according to state analysts.
Each county hopes to lessen the sting of such shortfalls by negotiating more favorable rates from electric companies. Calvert County now spends about $1 million annually on electricity. Charles County pays about $2.1 million annually to the Southern Maryland Electric Cooperative (SMECO). SMECO supplies electricity to customers throughout Charles and St. Mary's counties, and to all but a northern swath of Calvert County. The cooperative does not produce power, but distributes electricity purchased from other companies. County and SMECO officials said that could bode well for the cooperative's 115,000 customers, since the cooperative in some ways acts like the contemplated buying alliances.
"We've been going out for many, many years to the market and saying, 'We have this [demand] and what's the best deal you can do for us?' " said Jan Penn, a SMECO spokeswoman.
Reflecting the turbulence the electricity industry is experiencing, Penn could not predict that deregulation will bring cost savings.
"I can't say what the electric market is going to be," Penn said. "We're going to try to be as competitive as possible."
Potomac Electric Power Co.'s electricity generating plant at Morgantown is Charles County's single largest taxpayer, currently contributing about 10 percent of the county's property tax dollars.
In Calvert, Baltimore Gas & Electric's nuclear power plant at Calvert Cliffs has paid about $14 million annually--or nearly one-fifth of the county's budget--in recent years.