A day after advancing a proposal to give homeowners an estimated $5 monthly credit on their electric bills, state lawmakers decided yesterday to cut that amount to less than $2 while directing the rest to conservation and other programs designed to reduce energy use.
Proponents say the latest plan approved by the Senate Finance Committee would save consumers an average of more than $9 a month over time because the state would be investing in programs that also reduce electric bills, such as home weatherization and rebates for energy- efficient appliances.
"In essence, all of the money is still going to ratepayers," said Sen. Thomas M. Middleton, the panel's chairman and a Charles County Democrat. "This just changes how it's getting there."
Lawmakers are deciding how to divvy up money from a planned cap-and-trade system intended to reduce greenhouse gases. Under that system, utilities would be required to buy "allowances" for emissions from fossil-fuel plants that can then be traded through auctions starting in September. The state could raise $140 million annually through the initiative, according to some estimates.
The Senate panel voted Tuesday to give all of that money to ratepayers' credits, with several lawmakers championing the idea as a way to give consumers relief as soon as possible from double-digit increases in electricity rates. The issue has become a potent political topic and a difficult one to address because of the complexity of the energy markets.
Gov. Martin O'Malley has pledged to address the rising rates and the state's energy crisis, which some state officials say could lead to rolling blackouts by 2011 without some intervention.
His administration has proposed several bills this year aimed at increasing the state's reliance on renewable energy and promoting conservation, including the bill that would create the Strategic Energy Investment Fund with revenue from the greenhouse gas auctions. That regional initiative was established through a multistate agreement that O'Malley signed in 2007.
The Senate panel's decision to direct all of the proceeds to the energy-bill credits elicited an outcry from environmentalists who said that the state should invest in long-term solutions such as energy efficiency and conservation programs, and state officials including Malcolm D. Woolf, director of the Maryland Energy Administration, scrambled to fashion a compromise.
Woolf proposed directing roughly $10 million to a program that helps low-income residents pay their bills, $45 million to ratepayer relief, $65 million to conservation and efficiency, and $20 million to renewable energy programs, climate change research and administrative costs.
When the panel took up that proposal yesterday, Sen. Allan H. Kittleman, a Republican who represents Carroll and Howard counties, said: "This is where the ratepayers get the shaft."
Other lawmakers also objected. Sen. E.J. Pipkin, an Eastern Shore Republican, called the proposal "a victory for bureaucracy" because the funding for efficiency and conservation programs would accrue to the energy administration. He said that ratepayers should decide how to spend the money and that redirecting the money amounted to "blind faith that the government's going to do it better than the consumer."
laura.smitherman@baltsun.com