Hogan shakes up energy agency, opposes raising rates to expand efficiency efforts

Hogan shakes up energy agency, takes stand against having utility ratepayers subsidize cost-saving efforts.

The Hogan administration is shaking up the Maryland Energy Administration, firing two senior managers, moving the agency from Annapolis to Baltimore and taking a stand against raising utility customers' electricity bills to expand energy-efficiency programs.

The personnel and policy changes worry environmentalists, who say they fear the Republican administration is weakening or abandoning efforts started by its Democratic predecessor to clean the air and fight climate change with programs that they say would ultimately save ratepayers money.

"The administration's apparent hostility toward nationally recognized energy-efficiency programs in this state is deeply troubling," said Mike Tidwell, executive director of the Chesapeake Climate Action Network. "The No. 1 way to lower ratepayers' bills is to invest in efficiency."

Tidwell also expressed concern about uprooting the energy administration and about what he called its "apparent downsizing," with roughly one-fourth of its full-time and contractual positions now vacant.

The agency, which has doled out grants, loans, rebates and tax breaks to reduce energy use or develop renewable and other energy projects, is to move into the former Montgomery Ward building in Southwest Baltimore, where it will share office space with the Maryland Department of the Environment.

A spokesman for Gov. Larry Hogan played down the changes, saying the only thing that's different is the governor's unwillingness to raise what he characterized as fees paid by the state's ratepayers.

"The governor and the director are 100 percent committed to continuing the great work the agency does," spokesman Doug Mayer said. "This administration is against raising fees."

Leigh Williams, the agency's director, did not respond to repeated requests for comment.

The agency's programs director and policy and planning chief were dismissed last week. Both were hired under former Gov. Martin O'Malley. One, Fred Hoover, also served as director of the energy administration under former Gov. Parris N. Glendening, also a Democrat.

Both officials served at the will of the governor.

Mayer declined to discuss the firings. He said only that Williams, who was appointed by Hogan, "wanted to move in a new direction."

The officials' departure brings to seven the number of vacancies in an agency with 32 full-time employees, according to Mayer. Some of the 10 contract positions listed on the agency's website are also unfilled.

Karla Raettig, executive director of the Maryland League of Conservation Voters, said environmentalists fear the Hogan administration is "whittling away" at the energy agency and subsuming it in the larger environment department.

"There's a ton of reasons why having an energy administration is really important in Maryland as we move and transition to a clean-energy economy," Raettig said.

The website does not list any job openings, but Mayer said anyone who questions whether the agency is being downsized is 'jumping to conclusions.'"

"The director is building out the team to meet the mission and the goals of the agency," the governor's spokesman said.

Environment Secretary Benjamin Grumbles said the two agencies are not merging, but that "co-locating" them will allow "greater collaboration" on energy, environmental and climate issues "while saving money for the state and its citizens."

Grumbles estimated that the relocation would save $1.6 million in rent over the next four years.

MDE spokesman Jay Apperson said there was no timetable for the move, but it's expected to occur "within the next few months."

In what observers say signals a significant policy shift, Williams, the agency's director, notified the Maryland Public Service Commission a few weeks ago that the Hogan administration does not support plans to increase charges for some utility customers to finance expanded energy-efficiency efforts under the state's EmPOWER Maryland law.

"Given the Administration's concern over authorizing new fees, surcharges and taxes on Maryland residents, we are unable to support the utilities request for new and additional costs above those already approved by the commission," Williams wrote.

Until now, the energy administration had supported increases in rates to promote energy efficiency.

The Public Service Commission began a two-day hearing Thursday into utilities' plans for their energy-efficiency programs over the next two years.

The state's EmPOWER law, passed in 2008, called for a 15 percent reduction in per capita electricity usage by 2015. The state's five utilities are required to offer programs and services intended to curb customers' demand for electricity and natural gas, including rebates to add insulation, seal drafts in buildings and buy more energy-efficient lighting and appliances.

To help cover costs, utilities are allowed to levy surcharges on customers' utility bills. The monthly charges for residential customers range between $3 and $5 for every 1,000 kilowatt-hours of electricity consumed, according to Marissa Gillett, senior adviser to the commission chairman.

Since the EmPOWER program began, the commission has determined that the overall benefits of energy-efficiency programs — lowering bills by reducing demand, and avoiding the need to build more power plants — have far outweighed the costs. In July, the commission ordered the effort continued and raised the energy-savings goal.

As part of this week's hearing, Pepco and Delmarva Power & Light have proposed spending a combined $64 million over the next two years to expand energy-efficiency incentives and assistance to commercial and industrial customers, Gillett said. If approved, the utilities would be allowed to raise monthly charges on those customers by $3.86 and $3.11, respectively, for every 10,000 kilowatt-hours of electricity used.

The state's other three utilities, including Baltimore Gas & Electric Co., do not plan to increase expenditures, so are not seeking any increase in charges, Gillett said.

Mayer pointed out that the Hogan administration is not seeking to roll back the existing charges, so current energy-efficiency incentives should be unaffected.

"We're just [against] continuing to raise the fees," he said. "If those efficiencies are being gained, they're still being gained."

A spokesman for a national group advocating energy efficiency expressed concern about the Hogan administration's stance.

"In the long run, I think it'll end up costing Marylanders more money," said Brendon Baatz, senior research analyst with the American Council for an Energy-Efficient Economy.

Every dollar spent under Maryland's EmPOWER law has yielded $1.82 in benefits, he said, citing commission figures. He noted that Maryland imports about 40 percent of its power.

"If you reduce the energy-efficiency programs or hold them flat," he said, "you're increasing the amount of money that Marylanders spend on out-of-state electricity" as demand goes up.

tim.wheeler@baltsun.com

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