Monday, January 23, 2012

Maryland Governor O'Malley's Complicated Wind Power Subsidy

Maryland Governor Martin O’Malley has a new plan to promote offshore wind electricity generation that seeks to guarantee that a subsidy would not increase residents’ rates by more than $2 per month and 2.5 percent for the state’s largest commercial and industrial businesses. The plan would also require state regulators to hire an independent analyst to assess whether the costs to ratepayers, which would probably be added to monthly bills beginning in 2017 and continue for 20 years. Governor O'Malley believes the expenses would be outweighed by the potential benefits: 1,800 new construction jobs, increased electricity production and reduced air pollution.

Although O’Malley’s bill would mandate that the cost be no more than $2 per month, that per household price would have to be estimated up front on a 20-year prediction of future energy prices — a term twice as long as the state’s Public Service Commission typically forecasts.

The model is one that Republican
Gov. Chris Christie has backed in New Jersey, but Maryland’s version would come with an explicit requirement that the cost of the credits add no more than the $2 a month to residents’ bills. Although the arrangement is highly complicated, Maryland lawmakers are familiar and more comfortable with it. The state has a similar renewable energy credit requirement that subsidizes solar power generation, albeit at a much smaller cost to ratepayers.

This plan might be complicated, but ultimately it is trying to figure out how to add a subsidy of 21 cents per kilowatt hour to the bills of Marylanders for the offshore wind project(s).  That was the plan last year.  A subsidy is a subsidy.  It appears that the governor is trying to sneak it in under some sort of guarantee that residents can't be charged over $2 per month.  This is how states botched utility deregulation.  The Center supports reasonable subsidies for Maryland offshore wind power. (Wash Post, 1/23/2012)

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