House legislators pass bill allowing aggregation of home energy

Daily Record, The (Baltimore), Apr 2, 2003 by John O'Connor

House legislators approved a bill yesterday that would allow counties and municipalities to pool residential power customers to negotiate for better utility rates.

HB 24, which passed 93-42, would create a pilot program in Montgomery and Prince George's County allowing the aggregation if less than 20 percent of residential and small commercial customers in the area have not chosen an alternative group.

By banding together, residential customers can negotiate with other power providers for lower rates and better service. Industry and larger businesses already take advantage of aggregation.

The purpose of the bill, sponsors said, is to provide Pepco customers an escape route in case residential rates suffer double- digit increases when deregulation allows rate caps to expire in July 2004. Other counties, such as those served by Baltimore Gas and Electric Co., could join the pilot program later.

"We have a problem on the horizon," said Del. Dereck Davis, D- Prince George's, chairman of the House Economic Matters Committee, during floor debate. "You have a model that if this situation occurs in your jurisdiction, you don't have to reinvent the wheel."

But opponents said the bill does not protect consumer interests and is akin to "slamming," the shady practice some telephone providers used to switch service without customer permission.

"This is risky and this throws consumers to the wolves. It's not thought out," said Del. Kenneth D. Schisler, R-Middle Shore. "This is going to cause a lot of problems and this is going to cause phone calls."

Like the Book-of-the-Month Club, Schisler said, citing opposition from the Washington Public Service Commission to a similar proposal, customers will automatically switch to the local aggregate if they do not provide notice they wish to remain with their current provider. The result, he said, is to re-create a power monopoly -- but one managed by the government and in competition with private industry.

"We need to have a firewall between the activities of government and the activities of aggregation," said Del. Alfred W. Redmer Jr., R- Baltimore County.

The industry prefers the "opt-in" plan, which would require residents to petition to create a coalition to buy power. But finding the number of customers needed for economies of scale, said Del. James W. Hubbard, D-Prince George's, is too expensive and unworkable.

"It's so financially burdensome to do it, nobody does it," Hubbard said. "It works in other states. Opt out has provided consumer choice and stabilized choice.

"The issue is that Pepco threw some smoke out there today and claimed the sky was falling."

Many of the provision in HB 24 were debated in 1999 when power deregulation was first proposed, but industry, Davis said, does not want to honor previous pledges.

"They made a bad business decision," Davis said. "They agreed to it. No one was opposed to it in 1999. ... They never really thought they would have to live up to what the bill said. They never really thought there was a chance to lose these customers."

The bill also has the support of the Office of People's Counsel, which represents citizens on consumer issues. The Maryland Public Service Commission, said General Counsel Susan S. Miller, has left the bill as a policy matter for the Legislature and taken no position. The PSC opposed opt-out aggregation in 1999, Miller said, but HB 24 is substantially different from the first proposal.

Complicating matters, said Del. Susan W. Krebs, R-Carroll, was confusion over a similar Senate bill creating "opt-in" aggregation. A freshman delegate, Krebs said she did not understand why the industry had not testified against HB 24 during its hearing.

"I'm very disappointed with the industry," Krebs said.

Sen. Leo G. Green, D-Prince George's, who introduced the "opt-in" bill in the Senate, said he prefers HB 24 to his own legislation, SB 37. If the House bill can make it through the more conservative Senate Finance Committee, he said, it should pass on the Senate floor.