Both Republicans and Democrats on Tuesday raised tough questions about Gov. Martin O’Malley’s (D) plan to increase Maryland residents’ electric rates to subsidize development of an offshore wind farm.
The clean-energy project amounted to the centerpiece of O’Malley’s environmental agenda last legislative session, but it was shelved for at least a year when lawmakers said they had too many unanswered questions about 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.
On Tuesday, members of a key committee that promised to continue studying the proposal picked up largely where they left off, arguing the merits of the plan, as well as whether the deal struck on Capitol Hill last month to begin trimming the national debt would leave Maryland ratepayers footing a larger share of the cost should the state decide to move forward.
State Sen. Delores G. Kelley, a Baltimore County Democrat, also hit hard on O’Malley’s personal connection to one of the potential developers of the project, saying that it was an issue of great concern.
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 leasing rights for Maryland’s offshore wind areas.
“A lot of the negative press … is that there are people with insider connections in Maryland government who will stand to gain and that that would be an inherent conflict of interest, so that’s something that my constituents are paying a lot of attention to and keep asking me about,” Kelley said. She suggested that lawmakers may need to specifically exclude the company from competition if the plan is to win General Assembly approval.
“There is that connection, even if [they are] innocent entrepreneurs asking to lease federal land. If they were asking to lease it adjacent to some other state, and not this state, where they had these insider connections it might be different,” Kelley said. “That [issue] is going to be there, I don’t care what you say.”
Jim Lanard, president of the Offshore Wind Developers Coalition, took the brunt of lawmakers’ questioning. He defended Maryland Offshore LLC, the venture that includes Enright’s firm, as being at arm’s length with O’Malley’s administration because it is seeking federal leases, not state ones.
“It is unfortunate that this company has been tainted with this brush when there is no relationship between the leasing of the land and the state of Maryland,” he said.
After the federal government awards leasing rights, Maryland’s Public Service Commission, controlled by O’Malley appointees, would determine which company or combination of companies would be included in the state’s long-term power purchasing agreement. That agreement would set the cost to ratepayers and essentially determine the developer’s profit margin.
According to estimates earlier this year by 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 by the state’s nonpartisan budget analyst’s office 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.
Senate Finance Chairman Thomas M. Middleton, (D-Charles), said he was encouraged by new federal data that shows Maryland’s offshore wind area could produce even more energy than estimated. But he also said he was concerned about the complexity of the legislation and the heavy hand the state would have to play.
Senate minority leader E. J. Pipkin went further, saying the whole hearing seemed like a waste of time, especially given that the federal government has put on hold all loan guarantees to offshore wind developers as Congress prepares to debate additional budget cuts.
“It raises another potential red flag,” Pipkin said. “If the federal government won’t back these, then the burden could potentially fall on the ratepayers … I don’t know why we’re wasting everyone’s time.”
Pipkin also lashed out at Lanard, asking why offshore wind should receive special treatment.
“It appears that there is not a strong demand for this power away from government stepping in and forcing this to happen and that’s what makes this product unique,” Pipkin said. “We’re picking winners and losers and the government’s track record on that is not so hot.”
Lanard responded: “Senator, the government chose winners and losers when it funded $500 billion in subsidies to the oil industry, the coal industry, the nuclear industry over the last 50 years …if you don’t find a way of supporting offshore wind, you’re choosing the incumbents, meaning oil, gas and nuclear, and excluding the renewables.”
The committee plans to meet again on Sept. 14.