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EPSA Says Maryland PSC Report Provides Thoughtful Analysis, But Re-regulation Is Not the Answer
Proposals to Provide More Electricity to Maryland Consumers Are Already Emerging
WASHINGTON, D.C. - In a letter to the Maryland State Senate, the Electric Power Supply Association (EPSA) late yesterday agreed with some of the observations contained in a recent Maryland Public Service Commission (PSC) report on Maryland's electricity market, but cautioned against re-regulation as a solution.
"There are a number of challenges in today's marketplace relating to generation capacity and environmental issues, among others," EPSA President and CEO John E. Shelk wrote to Finance Committee Chairman Thomas Middleton. "But careful reading of this report confirms that the realities that confront all of us will not go away through adoption of more interventionist regulatory policies.
"The key question not adequately addressed by the report is whether any of the 're-regulation' options discussed would reduce or eliminate the identified barriers," said Shelk. "Shifting risks back to consumers only makes a difficult situation worse," he added. "There are no 'silver bullet' solutions."
Shelk praised the thoughtfulness of the PSC report and noted several areas of agreement including the depiction of an electricity market faced with rising construction costs, uncertainty over regulation of greenhouse gas emissions and difficulties in the siting of power plants and transmission lines. EPSA agreed with the report that these forces can impact how to meet future generation needs and shared the PSC's position in favor of prudent infrastructure development, both generation and transmission.
EPSA also joined the PSC report in acknowledging that certain areas in the PJM Interconnection, including Maryland, have narrowing generation reserve margins. However, EPSA said industry is responding with project proposals that would provide new electricity to Maryland consumers, such as a proposal by Competitive Power Ventures to build a combined cycle gas turbine (CCGT) plant in Charles County; Constellation's agreement with Conectiv to purchase power from a new CCGT plant in neighboring Pennsylvania and Sempra Generation's Catoctin project in Frederick County.
As stated in the PSC report, PJM's market monitor has determined that, "net revenues earned by generators were still inadequate to cover the costs of building new generation." PJM has addressed this situation through the implementation of the reliability pricing model (RPM) in order to provide price signals to incent new generation and keep existing generation in operation. EPSA agrees with the report that no final decisions should be made on possible state-mandated reliability procedures until at least the first full RPM auctions have been held early in 2008.
EPSA pledged its willingness to work with the Maryland PSC, PJM and others to meet consumers' future electricity needs in an environmentally responsible manner.
The full letter to Maryland Senate Finance Committee Chairman Middleton is available on the EPSA web site at www.epsa.org under "Recent Filings."
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EPSA Letter to Maryland Senate Finance Committee.PDF
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.