The Bright Side of the High Cost of Energy

March 5, 2006 – Vol.10 No.50

THE BRIGHT SIDE OF THE HIGH COST OF ENERGY.

Residential customers of Baltimore Gas and Electric (BGE) - the oldest gas utility in the U.S., and one of the oldest electric utilities - are getting prepared for what will be one the largest single leaps in electric rates in the nation. Rates are set to rise 72 percent for 1.2 million Maryland consumers beginning in June.

Lawmakers are scrambling to find ways to ease the burden in an election year.

The stage was set in 1999 when deregulation rulings for the power industry capped rates for a six-year period to give time for new power generating companies to set up shop in the lucrative and growing market. New competition would drive prices down, a boon to consumers, lawmakers said.

They were wrong. Few new companies showed up and making matters worse the cost of generating electricity has risen dramatically since then. So, it’s catch-up time for ratepayers. Now they’ll be paying what others do around the nation.

Yet there’s a silver lining. The cost gap between buying electricity from the grid and generating your own is narrowing.

Power from the grid for BGE customers is expected to be about 14 cents per kilowatt hour, an average increase of almost $750 a year. A solar electric system, according to a U.S. government study, is 18 -23 cents per kilowatt hour. Do the math.

Are lawmakers in Maryland thinking now’s the time to offer solar incentives to close the gap? If they are, they haven’t said so.

States with high electric rates, such as California and New Jersey, have effectively filled the gap and are building strong solar industries. Why not sunny Maryland?

( Editor’s note: Pepco Energy Services is one of the alternative providers in BGE’s coverage area. The company offers an all-renewable green electricity package at a fixed rate. That rate is set to climb about 72 percent beginning in the Spring as well, even though costs for renewables shouldn’t have risen. (Why should they? There’s no natural gas or coal involved.) Pepco Energy, in news reports, said only that they wanted to keep the green energy package competitive.

Of the 1.2 million BGE customers Pepco Energy has offered its green package only 27 have purchased it. (Yes, that’s 27, twenty-seven.) This editor is one of those 27. My electric rate will go from 7.35 cents per kWh to 12.60 cents per kWh beginning in April. Visit Pepco Energy Services Power Choice at http://www.powerchoice.com/ )