You might think the move to deregulate Maryland electricity markets was done in ignorance, accepted enthusiastically and exposed as a disaster only years later.
"This was uncharted territory for the legislature," Del. Dereck E. Davis,
who supported deregulation, told The Sun last month. "We took the
information presented before us and made the best decision we could, as
did the Public Service Commission at that particular time."
In fact, numerous smart and courageous people charted the territory quite clearly.
"Somebody is going to get screwed, and you and I know who it is," Del. Leon G. Billings told The Sun in 1997, as deregulation picked up steam. "And that's the residential retail consumer."
The Maryland Public Service Commission is questioning old decisions
with an eye to reclaiming part of the billions of dollars that
deregulation has cost customers. But don't get the idea that the
legislators, regulators and judges in charge were uninformed about the
risks. Billings and others spelled out exactly what was going to happen.
The 1999 deregulation removed price controls from electricity plants
and allowed outside buyers or unregulated affiliates of utilities to
take them over.
After a price freeze, Baltimore Gas and Electric
and other utilities were forced to buy electricity on the grid for what
the market would bear. Competition, the argument went, would bring new
plants and great prices.
"I think it'll be a long time before there's any competition" in
residential electricity, People's Counsel Michael J. Travieso predicted
to The Sun in 1999.
Travieso, who represented consumers, called Maryland deregulation one
of the worst such deals in the country. He knew Baltimore Gas and
Electric's demand to be compensated for its supposedly uneconomical
Calvert Cliffs nuclear plant (the famous "stranded cost" payment) would
kill competition and unjustifiably take millions from ratepayers.
(From 2000 to 2006, even BGE rivals were forced to collect stranded
costs and pay BGE and affiliates. Who could compete under that
circumstance? Calvert Cliffs, which once passed on the low cost of
nuclear energy to BGE customers, is now a money factory for BGE parent
Constellation Energy.)
Rate rise predicted
Travieso
predicted residential rates would rise after price caps were lifted, as
they did. He suspected that world energy prices were temporarily
depressed and that electricity consumers would have no protection if
they recovered.
"If we need higher prices for competition to develop for residential
customers, why are we deregulating?" he asked in a pointed letter to
then-Gov. Parris N. Glendening, quoted in The Capital of Annapolis.
Heck, Glendening suspected prices would rise, too. What happens "if the
rates all of a sudden go up 20, 25 percent" when caps expire? the
governor worried to The Sun in early 1999.
(Try 70 percent, governor - the amount BGE prices rose after a freeze
came off in 2006. And, no, it's not all caused by high prices for
natural gas and other generator fuels.)
That didn't stop Glendening from signing the bill when Senate President Thomas V. Mike Miller Jr., deregulation's chief legislative proponent, threatened his pet projects.
"The more people get a chance to look at this bill, the more they'll
realize how bad it is," Dan Pontious, executive director of the
Maryland Public Interest Research Group, told The Sun. "For consumers
and the environment, this is a terrible bill."
'Lopsided deal'
Even independent energy
companies - the ones who were supposed to make great offers to
homeowners in the new competitive marketplace - saw deregulation for
what it was: a way to transfer BGE's valuable plants to an unregulated
affiliate and then make them even more valuable by stifling competition.
"This is truly a lopsided deal if customers do not get a competitive
market in the bargain," Suzanne Daycock, director of the Mid- Atlantic Power Supply Association, told The Sun.
MAPSA fought the Public Service Commission's deregulation plan in court
for years - unsuccessfully. A competitive market never developed.
Nobody saw the future of deregulation more clearly than Billings, a Montgomery County Democrat.
"Our ratepayers are going to pay for it long after many of us are gone from this institution," he told The Sun in 1999.
Billings has left the legislature and lives in Delaware. He is not surprised at what's happened.
In 1999, incumbent electric companies "wanted to have the myth that
there could be competition," he said on the phone the other day. "But
at the same time, they wanted to make sure it could never occur."
Plenty of people with open eyes, however, saw through the myth.
