Restructuring Today
March 6, 2006

NEMA favors market pricing for Maryland

NEMA sees Baltimore Gas & Electric's impending move to market-based rates as a window of opportunity for small customers.

          The marketer group wants the Maryland PSC to favor market prices so that marketers can pour into the state and offer better deals at today's lower prices.

          BG&E bid out its power supply for SOS beginning in June when wholesale prices were high.

          That means customers coming off below-market, frozen rates will see a 70% jump in their power bills.

          That got GOP Gov Robert Ehrlich to ask the PSC to ease the shock.  The PSC staff came up with a three-year plan to phase in higher rates. 

          Customers would see the true power price on bills but pay less for distribution for seven months.

          After that, bills rise to cover both full rates and the deferred balance with interest but the program is strictly voluntarily. 

          Customers would have to opt in or -- if they're smart -- shop for cheaper power.

          NEMA wants the PSC to get BG&E's market in order before the new SOS rates hit by:

            Providing customer lists to marketers;

            Requiring the utility to buy receivables from marketers at a fair discount -- eventually allowing any third party to buy marketers’ bad debts;

            Educating consumers in a competitively neutral way;

            Making sure consumers understand the costs of opting for the mitigation plan and get full information about their competitive options, and

            Ensuring customers who opt for the mitigation plan or using budget billing can choose a supplier any time without paying a penalty or exit fee.

          Since BG&E has to change its billing system to handle the mitigation plan, this is a good time to make other changes, NEMA pointed out.

          The competitive retail market "stalled badly because of the below-market rate freeze," NEMA noted.

          Now that consumers "finally have the opportunity to see demand-responsive, market-based pricing signals," it's a good time to consider low-cost measures to improve the market.

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