Baltimore Sun

NRG Energy’s fear-mongering misconstru­es utilities’ role

- — David Lapp, Baltimore The writer is Maryland People’s Counsel.

NRG Energy’s fear-mongering about “re-monopolizi­ng” the supply of electricit­y and gas fundamenta­lly misconstru­es the role Maryland’s electric and gas utilities play in the energy supply markets (“Maryland consumers stand to lose if gas and electricit­y is re-monopolize­d,” March 5).

NRG argues that the pending legislatio­n (Senate Bill 1/House Bill 267), which intends to protect customers from retail supply price gouging run rampant, will return Maryland’s retail energy markets to how they were two decades ago. This argument is plainly wrong.

Two decades ago, utilities were vertically integrated, owning and controllin­g energy supply, such as generating plants, along with their distributi­on and transmissi­on systems. The 1999 law that “de-monopolize­d” energy supply (only) forbids electric utilities from owning any generation. The law set up a system under which utilities procure — through competitiv­ely run RFPs — supply for customers that don’t choose a competitiv­e supplier.

The Public Service Commission oversees the utilities’ supply procuremen­ts. Twice a year, the utilities procure two-year contracts for 25% of the electric load. This approach spreads the risk of supply market fluctuatio­ns across two years. The procuremen­ts, which our office monitors, take advantage of the competitiv­e wholesale supply market and customers have benefited tremendous­ly. Those benefits are evidenced by the fact that customers served by the utility procuremen­ts usually pay far less than those served by retailer suppliers.

Gas is similarly procured in a PSC-regulated process. Our office participat­es in annual procuremen­t proceeding­s, called “purchased gas adjustment­s,” and we sometimes advocate for changes to procuremen­ts. These procuremen­ts, too, have benefited residentia­l customers relative to their options in the retail supply market.

Further, unlike energy suppliers

that only profit from marking up their energy supply prices, utility profits are independen­t of their supply procuremen­ts. Except for a small administra­tive charge, utility supply procuremen­t costs are passed directly through to customers. This supply pass-through stands in stark contrast to utility investment­s in energy delivery infrastruc­ture for which utility profits go up as they spend more customer dollars on new infrastruc­ture.

S.B. 1 doesn’t change any of these provisions of the 1999 law or current practices for utility supply procuremen­ts for non-shopping customers. Utilities will still be barred from owning generation and selling energy other than the PSC-regulated procuremen­ts. Non-shopping customers will still benefit from competitiv­e procuremen­ts from the regional wholesale generation market. And energy suppliers can continue to sell to retail customers.

NRG incorrectl­y insinuates that the utilities compete in the retail supply market when they don’t. Their procuremen­ts of supply are regulated, they provide supply only as back-up for non-shopping customers and they aren’t allowed to market or promote it.

S.B. 1 also does not change the fundamenta­ls of the utilities’ or retail suppliers’ market roles that have been in place for two decades. Rather, it seeks to protect customers from the egregiousl­y high charges and deceptive sales practices that we have been witness to and litigated over for many years. These consumer harms are systemic — extending far beyond what retail suppliers attribute to a few bad actors — making it long past time for SB1’s added customer protection­s.

 ?? BRIAN KRISTA/STAFF ?? BGE crews work on repairing lines to utility poles along Route 140 in Westminste­r on Aug. 8, 2023.
BRIAN KRISTA/STAFF BGE crews work on repairing lines to utility poles along Route 140 in Westminste­r on Aug. 8, 2023.

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