Energy-conservation bill meets no objections


A bill to require gas and electric utilities to develop energy-conservation plans, and reward them for doing it, faced no opposition during a House of Delegates committee hearing in Annapolis yesterday.

Even Maryland utilities, which would see the rules that govern how they make a profit change under the proposal, said they had no objection, since they are already coming up with similar plans voluntarily.

One utility that operates in Maryland, Washington-based Potomac Electric Power Co., has already reached an agreement in principle with state regulators on an energy-conservation plan and is negotiating the details of what kind of conservation programs it will offer to Marylanders in the suburbs of Washington this summer.

Baltimore Gas and Electric Co. said that it has been negotiating with state officials to develop a similar conservation agreement since late last year.

"Pepco basically is doing everything in the bill," said Martin J. Kmetz, government-affairs manager for the power company, whose Maryland customers primarily are in Montgomery and Prince George's counties.

"We've been extremely aggressive in trying to set up conservation programs throughout our territory," he said.

Some state officials, who said they also support the bill, indicated that the utilities' willingness to conserve energy might not have been entirely voluntary.

Pepco, for example, agreed to its precedent-setting conservation proposal with consumer representatives last fall only after striking a deal to get quick approval for construction of additional generators at a Maryland power plant.

"There was a memo of understanding," said Mary Beth Tighe, an economist for the Maryland Public Service Commission. "The deal was we wouldn't contest [the need for the generators] if they would implement" a conservation plan.

"The cheapest, cleanest, most plentiful source of new energy is not solar; it's not coal or gas or nuclear," said Delegate Brian E. Frosh, D-Montgomery, the bill's sponsor. "It's conservation."

Mr. Frosh said that the current regulatory structure gives power companies no incentives to conserve energy or to urge their customers to do so.

"They sell energy, not conservation," he said.

"They get to amortize the money they invest in new power plants. But they also earn a rate of return on those plants."

A power company can deduct the costs of investing in conservation, but it won't earn a rate of return unless it builds a new plant, and it forgoes the profits from selling the energy that was conserved, Mr. Frosh noted.

The bill under discussion yesterday before the House Constitutional and Administrative Law Committee would require all Maryland gas and electric utilities to come up with energy-conservation plans, allow them to recover any costs associated with the plans and provide other financial incentives.

Representatives from the Public Service Commission and the Office of the People's Counsel, the state agency that represents consumers before the commission, testified in favor of the bill.

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