The Maryland Senate voted down a major piece of Gov. Martin O'Malley's environmental agenda yesterday amid a squabble among Democrats over how much money should be dedicated to rate relief for consumers coping with rising utility bills.
The Senate voted 25-21 to reject the bill setting out how money from the Regional Greenhouse Gas Initiative would be used. Lawmakers say the initiative could generate about $140 million every year through fees on industry, which will have to buy pollution credits through auctions beginning this year, but some estimates put the figure much higher.
O'Malley, a Democrat who made energy policy a cornerstone of his agenda, had proposed using at least some of the money for energy efficiency and conservation programs to help reach his goal of reducing energy consumption in the state by 15 percent over the next seven years. The vote does not negate the new cap-and-trade system, but it puts in flux how the proceeds would be spent.
The unexpected defeat reflected how anxious lawmakers are about the effect of soaring energy prices on constituents and left the administration scrambling to resurrect the proposal, which proponents say would help consumers in the long run.
"The governor hopes that the Senate will reconsider the legislation in the coming days," said O'Malley spokesman Rick Abbruzzese. "It's important legislation that will allow us to invest in our energy future and at the same time provide some additional relief to Maryland families."
Sen. Thomas "Mac" Middleton, chairman of the Finance Committee, said he planned to ask the Senate to reconsider the vote today. If that procedural move doesn't work, he said the House of Delegates also is considering the bill, and that he could try to move their version through his chamber.
"It's the governor's bill, and it's very important to him, and as a committee chairman, I certainly don't want to lose a bill on the floor," the Charles County Democrat said. "There's a lot of dynamics here, and these are very complex bills."
Deciding how to divide the proceeds has proved particularly thorny. Some lawmakers want more money for programs that would help consumers save energy through incentives to use new, efficient appliances and other technologies. Other lawmakers argue that much more of the money should be returned to consumers in the form of rebates.
The Finance Committee initially voted in favor of a proposal that would have yielded $5 monthly credits on residential electric bills. But the panel reversed course last week and reduced the rebates to about $1.80 a month, leaving the rest for energy efficiency programs, assistance for low-income ratepayers and other initiatives. That formula was endorsed by the O'Malley administration.
During a late-night session Monday, senators tried but failed to change that formula. Sen. Joan Carter Conway, the Baltimore Democrat and chairwoman of the Education, Health and Environmental Affairs Committee, wanted to boost the amount dedicated to help lower-income residents pay utility bills and to direct the rest to efficiency and conservation. Sen. E.J. Pipkin, an Eastern Shore Republican who is influential on energy issues, wanted to give all of the auction funds back to utility customers.
Some lawmakers and environmentalists say that an across-the-board rebate to more than 2 million households would amount to a couple of dollars and do little to reduce utility bills that run into the hundreds of dollars. They also say that efficiency and conservation saves consumers more money over time.
Separately, the legislature is considering a settlement brokered by the state with Constellation Energy Group that would include rebates for Baltimore Gas and Electric Co. customers.
Environment Maryland director Brad Heavner said that funding conservation programs ensures that the greenhouse gas initiative achieves its goal of reducing pollution. "If we don't spend this money in the right way, that effort will have failed," he said.
But with residents pinched by a slowing economy and higher energy prices, many Democrats were conflicted. Sen. Nathaniel J. McFadden, the president pro tem from Baltimore, said the idea of spending on energy efficiency would be hard to explain to consumers right now.
"Our consumers are screaming about the costs to their families," McFadden said. "They want R-O-L-A-I-D-S ... relief."
Pipkin decried the "boondoggle bill" that creates "a very expensive empire" for the Maryland Energy Administration, which would create the efficiency and conservation programs.
"The money should have been returned to ratepayers," he said.
Republicans said that a package of bills proposed by O'Malley would increase the cost of electricity in Maryland at a time when rates are soaring. The other bills would require power companies to buy more renewable energy and would establish the governor's goal for reducing energy consumption while requiring utilities to offer consumers financial incentives to conserve.
"We're hitting them three times in one morning," said Sen. Allan H. Kittleman, the minority whip from Howard County.
The state Senate passed the other administration bills yesterday with comfortable margins.
The debate over the auction proceeds exposed a quarrel between the two Senate committees that considered the bill. Conway demanded that her committee be removed from the bill because the changes endorsed by the panel were not ultimately adopted. Her motion was rejected on procedural grounds.
Immediately afterward, Sen. Delores G. Kelley, a Baltimore County Democrat, stood and said: "Colleagues, this is a good bill."
"Yeah, right," Conway muttered audibly in response.
The House put off voting on its version of the legislation yesterday, though members began debate and aired similar concerns to those heard in the Senate.
"It's a lovely piece of legislation in theory. Everybody is for a greener world," said Del. Patrick L. McDonough, a Republican representing Baltimore and Harford counties. "But it does not impact consumer rates in any way except for costing them more money."
That chamber has hashed out its own formula for dividing the auction proceeds.