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Clean energy saves Md. consumers money

Are you interested in saving money on your electric bill and having a cleaner environment?

Currently, in Maryland, restrictions exist that prevent families and small businesses from getting the financial and environmental benefits of affordable and clean renewable energy. Large corporations do not face these same restrictions and are able to access big savings on their electric bills.

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Most households, and many businesses, still rely on their utilities to buy the actual electricity sent through power lines. This is known as Standard Offer Service and is regulated by the Public Service Commission (PSC). Ordinarily, the utilities — such as BGE and PEPCO — buy this power only through two-year contracts. This over-reliance on short term power purchases fails to protect customers from energy price hikes, leaving households and businesses exposed to price changes as the roller coaster of fossil fuel prices rises and falls. Marylanders are needlessly exposed to unstable energy markets, and it is time to inject some longer-term thinking into the state’s energy policy. The answer may actually be in clean energy.

Baltimore County plans to install solar panel fields at four locations as part of an effort to improve energy efficiency and to use more clean energy, County Executive Kevin Kamenetz announced Monday.

U.S. corporations have already figured this out. Big business discovered that longer term contracts for renewable energy can actually beat even today’s low electricity prices if they buy it in bulk. Major U.S. companies like Apple, Facebook, GM, Nestle and Amazon, among many others, have signed long term (10- to 20-year) contracts for wind energy. This gives them a low electricity price on day one that stays low for a long time, no matter what happens to broader energy markets. The cost of wind and sun never changes — they’re always free.

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These types of electricity contracts have revolutionized how big businesses buy power, and they pass the savings on to customers. They also make businesses more efficient because they allow for long-term planning — businesses know what their electricity costs will be five, 10 or 15 years down the road.

Meanwhile, in the states with the old-fashioned “vertically integrated” monopoly system, utilities are also entering into these longer-term contracts for clean energy and passing the savings on to their ratepayers. Southern Company is using these contracts in Georgia and Alabama to keep electric bills low — not states that one thinks of as prioritizing clean energy to be green. But politics aside, the savings are undeniable.

In “deregulated” states like ours, however, if we want to capture these types of savings for customers we need to change the way we buy electricity and open our electricity procurement process to renewable energy long term contracts. Massachusetts, Connecticut and Rhode Island have passed legislation in recent years that do exactly that.

The Supreme Court is expected to hear an electric utility case from Maryland this month that could have implications for ratepayers and resolve a national dispute over how far states may go to encourage power generation for their residents.

For them, the benefits are clear. Massachusetts’s Attorney General said recently signed long-term wind contracts could save more than $680 million over 15 years. Connecticut saw similar benefits, with projected savings for consumers toping $200 million. This is smart policy that we can emulate in Maryland.

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The Maryland General Assembly is currently debating Senate Bill 391/House Bill 967, which would take a small portion — about 2 percent to 3 percent — of Maryland’s electricity and bank it in competitively-bid, long-term, fixed-price contracts for clean energy. The PSC can only authorize the contract if they think it will be cheaper, so that the consumers are protected from electricity deals that cannot compete. This small, targeted effort will provide much needed risk reduction for Maryland ratepayers, while demonstrating the cost savings of this approach. As a bonus, it will spur development of clean energy, which of course means cleaner air for Maryland.

This issue should be straightforward and non-partisan. Saving consumers money with smart, market-based, competitive long-term contracts benefits everyone. Buying electricity in short-term, fuel-price-based auctions ignores a major savings opportunity and harms Maryland electric customers. It is time for the legislature to pass this modest initiative and get Maryland electric customers in on the deals that big business gets. Saving the environment is an added bonus.

Brian Feldman (Brian.Feldman@senate.state.md.us) is a Democrat representing Montgomery County in the Maryland State Senate. Luke Clippinger (luke.clippinger@house.state.md.us) is a Democrat representing Baltimore City in the Maryland House of Delegates.

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