Municipalities in Md. voice support for aggregation

Daily Record, The (Baltimore), Feb 14, 2007 by Dori Berman

Hoping last year's upheaval over rising electricity rates will help their cause, local officials from across Maryland asked lawmakers Tuesday to allow local governments to pool their residents for greater purchasing power.

But some legislators seemed inclined to wait until a reconstituted Maryland Public Service Commission has the chance to examine the state's electric markets. Following last year's rate increase for BGE customers, some are wondering if the state should attempt to return to a more regulated market.

Sen. Brian Frosh, D-Montgomery, is the chief sponsor of Senate Bill 34, which would allow counties and municipalities to aggregate residents into purchasing pools to buy electricity. The Senate Finance Committee heard testimony on the bill, which has failed each year since the electric market deregulation in 1999.

"It's just an attempt to give ordinary folks a break by combining with fellow citizens and perhaps getting a better deal from their local provider," Frosh said. He noted that the bill would give residents the kind of purchasing power already enjoyed by large companies and governments.

But Senate Finance Committee Chairman Thomas "Mac" Middleton, D- Charles, said his committee also will consider a bill asking the PSC to study the state's electric market and the options going forward. If the PSC favors returning to a more regulated market, he said, aggregated purchasing pools could complicate the issue.

"The Senate Finance Committee is very serious about taking this whole issue of whether or not we should go back to a regulated environment before the new PSC. I don't have a dog in the hunt. My main concern is that the consumer gets the best, most reliable service out there," Middleton said.

He suggested that the committee might consider approving the aggregation measure but making it contingent upon the outcome of a PSC study.

Opponents of the bill warned that municipal aggregation would not necessarily guarantee lower rates, and would destabilize the market for customers outside of the purchasing pools.

Wayne Harbaugh, manager of pricing and regulatory services for BGE, said his company's customer base is the same as a purchasing pool in the wholesale market.

"Those municipalities are going to be out there in the same wholesale market as us. If it's the same market, they're going to get essentially the same prices," Harbaugh said. "Being in an aggregated group is not going to protect you from the prices in the wholesale market."

Harbaugh and other opponents also criticized the measure for allowing localities to use "opt-out" aggregation, which would include all residents in the pool unless they request to be left out.

"What happens is the municipality sends out a letter, and if the customer does not respond within 21 days, they are swept up into the aggregation group," he said. "I don't know about you, but I don't open all the junk mail that comes to my house."

But the representatives of local governments told lawmakers that they, as legislators, have only their residents' best interests in mind, and they would not sponsor an aggregation agreement unless it would benefit consumers.

"We're just trying to save our citizens some money," said Bel Air Commissioner David Carey, president of the Maryland Municipal League. "It's not any money that's going to come into the city coffers. We are just trying to use the bargaining power of thousands of residents."