ANNAPOLIS — Environmental advocates are fighting an energy bill that Democratic leaders say will lower utility bills and further the state’s clean energy initiative.
If it is passed, the legislation would make it easier to build new natural gas plants in the state — a move that has frustrated environmentalists typically allied with the party.
“I know that people are frustrated about prices. It is front and center,” said Senate President Bill Ferguson, a Democrat from Baltimore City and sponsor of the bill. “We’re going to have to make some tough choices that make some of our friends unhappy, but it’s about making sure that our constituents are served with lower bills in a way that still recognizes that we’re in a climate crisis.”
The Next Generation Energy Act aims to lower utility bills by building new energy projects in the state, requiring new projects to be cleaner than coal or oil. These projects include power plants and energy storage, according to the office of Del. C.T. Wilson, a co-sponsor of the bill.
The bill sets up a procurement process for new dispatchable and nuclear energy projects. Dispatchable energy — any type of energy that can be adjusted to fit the needs of the power grid — is often used in reference to both renewable and nonrenewable sources of energy.
But the main concern that brought climate activists to pack the committee room at a recent hearing was a portion of the bill that could pave the way for the construction of new natural gas plants as Maryland approaches emission reductions and clean energy deadlines in the 2030s and 40s.
“Even though the dispatchable energy technically in the bill as outlined, says it can be battery storage or gas,” said Brittany Baker, the Maryland director of the Chesapeake Climate Action Network. However, “because of some of the other provisions in the bill, it’s way more likely that that … the project that would win, would be gas plants rather than battery storage projects.”
Natural gas is considered cleaner than coal and oil but still contributes to greenhouse gas emissions, according to the U.S. Energy Information Administration. Environmental advocates criticized new natural gas as expensive and bad for both the climate and public health at an online news conference in February.
Ferguson says that the hope for the bill, if passed, is a “shorter-term impact (on utility bills) that will be marginal but a longer-term impact that will be dramatic.”
At the hearing, bill sponsors spoke of the urgent need to lower utility bills by building more energy generation in the state. They highlighted the supply and demand issues that have been plaguing the regional power grid, and Maryland’s reliance on imported energy.
“Our top priority must be to expedite the construction of new, cleaner energy in Maryland,” Ferguson said during his testimony.
But opponents to the bill hold firm that new natural gas was antithetical to Maryland’s climate goals. They’re doubtful about how effective it will be in tackling rising utility costs.
“The utility bill hikes that we’re seeing right now are not related to supply and demand issues. Those won’t be coming until June,” Baker said. “Once we do see that piece, the solution is not building out a gas plant, because at least in the estimate that I’m aware of, that generation won’t even start coming on the grid for five or six years. A battery storage project could start coming onto the grid in less than two.”
The timeline, Ferguson told Capital News Service, depends on who bids for the dispatchable energy, so there is not currently a known timeline on when customers could see an impact on their utility bill.
The bill also states that any new natural gas plant would have to be able to convert to hydrogen or zero-emissions biofuel and use carbon capture in the future. However, Baker said green hydrogen “has not proven itself to be scalable.”
“There will be some uses for green hydrogen in our clean energy future, but it will never be for powering power plants or providing day-to-day heating requirements for homes and communities,” she said.
So why are utility bills so high?
Utility bill prices have soared in Maryland, and have been on the minds of lawmakers and advocates alike this session.
Bill sponsors emphasized regional problems during the recent hearing, saying the state needs to address supply and demand issues to promote energy reliability and affordability.
But many of the issues driving up utility bills right now are more localized and immediate, experts say. They point to a cold winter, rising distribution rates, and other factors.
Lawyer David Lapp told CNS that most of the energy bills being heard in the General Assembly can only impact utility bills in future years. Lapp is the state’s People’s Counsel, appointed by the state attorney general and charged with representing the interests of residential utility customers.
“The costs that are driving up customer bills today are not impacted by … these bills to promote generation in the state,” Lapp said. “The high bills right now are largely the result of increased consumption because of cold weather and, for many Maryland customers, distribution rates that have rapidly increased in recent years.”
Temperatures in Maryland dipped dramatically in late January when a polar vortex veered into the region.
He pointed to rising costs of the delivery of gas and electricity – not a rising cost of fuel – as a major source of rising energy costs. He said that distribution rates have been on the rise for years among energy companies serving Maryland, including Baltimore Gas and Electric, Columbia Gas, Delmarva Power and Pepco.
Distribution rates for those companies have all gone up in recent years, according to the Office of People’s Counsel.
“You could have somebody who’s literally a mile down the road and paying significantly less than half of what (other) customers are paying,” Lapp said.
Chuck McDade, a senior communications specialist for Pepco, attributed recent utility bill spikes to the cold weather as well as other current impacts including changes in rates. Other cost adjustments could also play a part, he said.
The commission approves rate increases in proceedings similar to a court’s, said Communications Director for Maryland’s Public Service Commission Tori Leonard. That includes a public hearing.
However, Lapp stressed that while the commission may give approvals, Pepco still holds responsibility for submitting the rate changes.
“It is true that the Public Service Commission has approved those,” Lapp said. “But it is also true that Potomac Edison hasn’t come in and asked for higher rates, and we’re not aware of any data showing any significant differences in performance of Potomac Edison versus Pepco.”
“They’re monopolies, which is why they should be heavily regulated,” Lapp said of utility companies. “Are regulators doing a good job keeping those prices down is one of the relevant questions here.”
Paul Pinsky, director of the Maryland Energy Administration, introduced another possible reason for high utility bills in a column for The Baltimore Sun – local utility companies replacing functional pipes to make a profit.
“I wish … we could look to one source and say, ‘this is the problem’,” he told CNS, “but I think it’s more complicated than that.”