Utility rate modernization reform makes sense for Maryland

Blog post by Christine Ross

Christine Ross, the president and CEO of the Maryland Chamber of Commerce, has 20 years of leadership experience in the business community. She is a visionary coalition builder guiding the Maryland Chamber’s efforts to improve competitiveness, attract and retain talent, grow jobs, engage the community and provide legislative advocacy.

The Maryland Chamber of Commerce has long supported balanced and predictable laws and regulations that promote economic development and do not impose unreasonable or unnecessary costs on businesses or their customers.  There currently is legislation before the Maryland General Assembly, House Bill 653, (“Electric Companies and Gas Companies – Rate Regulation – Alternative Rate Plans”), otherwise referred to as the “Alternative Rate Plans.”  This legislative proposal is a long overdue enhancement of state utility regulations. HB 653 received approval by the House Economic Matters Committee on a unanimous, bipartisan vote, was passed by the House of Delegates, and is currently in the Maryland Senate, awaiting action by the Senate Finance Committee.

Access to affordable, reliable and secure energy is critical to Maryland businesses and residential customers. To achieve the strongest modern energy system possible, we must ensure stakeholders, customers and the utilities together are aligned on priorities for today and the future.  Yet, we continue to regulate the state’s utilities with the same methods that have been in use since the early 20th century.

One of the great aspects of the General Assembly bill hearing process is that it provides a forum for a frank and open discussion of a bill’s merits or concerns, and allows for changes to be made that can address those concerns and thereby improving the legislation. Following substantive and constructive input from the Public Service Commission, the People’s Counsel, and several others at the hearings, positive changes were made to the legislation, in the form of amendments, to address nearly all concerns.

The Alternative Rate Plan legislation, in its amended form, enables Maryland utilities to better modernize the state’s energy grid to improve its reliability and security. Modernizing utility regulations will provide additional options for the Public Service Commission to regulate utilities with greater predictability.

The majority of states, 39 in fact, have already adapted similar modernization reforms over the past 30 plus years.

The Maryland Chamber would never support legislation that we believe would risk Maryland’s strong consumer protections; this legislation does not present such a risk. It will not weaken existing consumer protections and will not increase rates for Marylanders. No rates will increase or change without the approval of the Public Service Commission.

The Maryland Public Service Commission continues to remain the final arbiter of whether a proposal will result in “just and reasonable rates” for consumers. Should the Commissioners believe that the filing made by the utility fails to meet this high standard, they can reject it. This legislation provides greater transparency into the rate making process by allowing utilities to make filings that are forward-looking. This in turn will require the utilities to lay out their investment plans and associated costs before spending money.  And, finally, it increases accountability and ensures consumers are protected by holding utilities to their budgets and requiring that all forecasted costs are reconciled with the dollars spent, meaning that utilities can only charge customers for the work that they do.  In fact, this provision is an improvement to today’s regulations and provides for stronger consumer protections.

It is time for Maryland’s energy regulatory environment to keep up with the times and provide the same tools currently used by other states against whom we compete to attract high-quality employers and the jobs they can bring.  This legislation, as amended, addresses that need while enhancing consumer protections for all Marylanders.

The Maryland Chamber is committed to supporting legislation that encourages business investment within the state, creates job growth and fosters a robust economic climate.

We strongly urge the Senate of Maryland to cast swift bipartisan legislative support for this positive move towards a more efficient, predictable and transparent regulatory process.

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