Maryland Electric Deregulation is the result of a Bill passed in 1999 by the Maryland General Assembly. This bill changed the entire face of the Maryland utility industry.
In 1999, the Maryland General Assembly, under pressure from state manufacturers, enacted legislation that would cause the electric industry in Maryland to become deregulated. This bill, the Electric Customer Choice and Competition Act of 1999, [1] was passed through the Maryland General Assembly with many Democratic and every Republican legislator's support. The bill was signed into law by Democratic Governor Parris Glendening who was not in favor of deregulation, but was threatened with an override if he opted to veto. [2] Prior to this legislation, the local electric utility was in charge of procuring and delivering power to the people in their service territory. Under the new legislation, the consumer could choose to continue purchasing power from the local utility (known as Standard Offer Service (SOS) or Provider of Last Resort (POLR)) or to purchase power from an electric retail supplier. The local utility would still be responsible for the delivery of the power.
As of 2012, Maryland residents had the 15th highest electricity rates in the United States and average monthly residential electric bills in Maryland were the 4th highest in the nation. [3] According to the Maryland Public Service Commission, Maryland considered deregulating "to put downward pressure on costs, thus providing consumers with the lowest possible prices for electricity, to allow all customers to choose their power supplier, to provide incentives for the creation and development of innovative products and services." The Maryland General Assembly placed several stipulations in the legislation designed to foster competition and maintain a level playing field between the retail suppliers and the local utilities. First, the utility would be required to eliminate their generation plants, either through sale or through transfer to a non-regulated business unit. This would force both the suppliers and the utility to use the wholesale energy market to procure power. Baltimore Gas and Electric Company (BGE) chose to transfer its generation to Constellation Generation Group. Both BGE and Constellation Generation Group are subsidiaries of Constellation.
Second, customers would be forced to stay on POLR rates for a number of years. During this time, POLR rates would remain frozen at a certain rate. This frozen rate was set between 3% and 7.5% lower than 1999 prices. Some companies, like BGE, had not increased their electricity rates since 1993. Therefore, in this period, customers would be paying less than for electricity than they had six years prior. Once that time was over, customers could shop for a different supplier and POLR rates would change from the capped rate to the market rate. The amount of time that rates would be frozen varied by company and by customer class (residential, commercial, industrial, etc.). Over a period of 6 years, various customers' rates became unfrozen without incident. In 2007, however, that changed.
In 2007, one of Maryland's largest groups, BGE's customers, was slated to move to market rates. Enormous rate increases in the wholesale electricity industry at that time meant that, while their rates would become comparable to other Maryland utilities, BGE customers would have their rates increased by 72%. This increase, greater than any other utility and coupled with election year politics, created a huge outcry.
Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a result of new trends in economic thinking about the inefficiencies of government regulation, and the risk that regulatory agencies would be controlled by the regulated industry to its benefit, and thereby hurt consumers and the wider economy. Economic regulations were promoted during the Gilded Age, in which progressive reforms were claimed as necessary to limit externalities like corporate abuse, unsafe child labor, monopolization, pollution, and to mitigate boom and bust cycles. Around the late 1970s, such reforms were deemed burdensome on economic growth and many politicians espousing neoliberalism started promoting deregulation.
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Commonwealth Edison, commonly known by syllabic abbreviation as ComEd, is the largest electric utility in Illinois, and the primary electric provider in Chicago and much of Northern Illinois. Its service territory stretches roughly from Iroquois County on the south to the Wisconsin border on the north and from the Iowa border on the west to the Indiana border on the east. For more than 100 years, Commonwealth Edison has been the primary electric delivery services company for Northern Illinois. Today, ComEd is a unit of Chicago-based Exelon Corporation, one of the nation's largest electric and gas utility holding companies. ComEd provides electric service to more than 3.8 million customers across Northern Illinois. The company's revenues totaled more than $7 billion in 2023.
The Public Utility Regulatory Policies Act is a United States Act passed as part of the National Energy Act. It was meant to promote energy conservation and promote greater use of domestic energy and renewable energy. The law was created in response to the 1973 energy crisis, and one year in advance of a second energy crisis.
Constellation Energy Corporation is an American energy company headquartered in Baltimore, Maryland. The company provides electric power, natural gas, and energy management services. It has approximately two million customers across the continental United States.
Baltimore Gas and Electric Company (BGE) is a subsidiary of the Exelon Corporation and Maryland’s largest gas and electric utility. BGE earlier had created the holding company Constellation Energy in 1999. Constellation Energy was acquired by Exelon in 2012.
The Electric Reliability Council of Texas, Inc. (ERCOT) is an American organization that operates Texas's electrical grid, the Texas Interconnection, which supplies power to more than 25 million Texas customers and represents 90 percent of the state's electric load. ERCOT is the first independent system operator (ISO) in the United States. ERCOT works with the Texas Reliability Entity (TRE), one of six regional entities within the North American Electric Reliability Corporation (NERC) that coordinate to improve reliability of the bulk power grid.
Electricity provider switching is the ability of power consumers to have an option to choose their electricity provider in a deregulated electricity market as permitted by a state public utilities governing body.
The Texas electricity market is deregulated, meaning that there is competition in the generation and distribution of electricity. Power generators in the Texas Interconnection, managed by the Electric Reliability Council of Texas, participate in an energy-only electricity market and are compensated only for the electricity they produce. The wholesale generation market was deregulated in 1995 and the distribution market in 1999, with Texas Senate Bill 7. This replaced the prior system in which power was generated and consumed locally by the same utility with one in which retail providers contracted with generators across the state.
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The Maryland Public Service Commission (PSC) is an independent administrative agency within the state government which regulates public utilities and certain taxi cab and other passenger services in Maryland. Similar to other state public utilities commissions, the Maryland PSC regulates and sets tariff rates for natural gas, electricity distribution, local telephone, water, and sewage disposal companies. The PSC also sets the tariff rates for pilot services for vessels and privately owned toll bridges, approves the construction of electric generating plants and overhead transmission lines with a voltage above 69 kV, and licenses retail natural gas and electricity suppliers. The PSC offices are located in Baltimore in the William Donald Schaefer Building.
The Southern Maryland Electric Cooperative (SMECO) is an electric distribution cooperative which is headquartered in Hughesville, Maryland, United States. SMECO serves approximately 161,000 customers in Calvert, Charles, Prince George's, and St. Mary's counties of southern Maryland. Under its rules as a nonprofit cooperative, SMECO passes on its costs to its customer-members without markup or profit.
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The Georgia Public Service Commission (PSC) is a statutory organ of the state government of Georgia; elected among five commission districts, the board consists of a Chairman, a Vice-chairman, and three Commissioners. PSC regulates telecommunications, transportation, electric and natural gas services in the U.S. state of Georgia. Commissioners are elected in partisan elections statewide, though they must reside in a district.
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Utility ratemaking is the formal regulatory process in the United States by which public utilities set the prices they will charge consumers. Ratemaking, typically carried out through "rate cases" before a public utilities commission, serves as one of the primary instruments of government regulation of public utilities.
Energy brokers assist clients in procuring electric or natural gas from energy wholesalers/suppliers. Since electricity and natural gas are commodities, prices change daily with the market. It is challenging for most businesses without energy managers to obtain price comparisons from a variety of suppliers since prices must be compared on exactly the same day. In addition, the terms of the particular contract offered by the supplier influences the price that is quoted. An energy broker can provide a valuable service if they work with a large number of suppliers and can actually compile the sundry prices from suppliers. An important aspect of this consulting role is to assure that the client understands the differences between the contract offers. Under some State Laws they use the term "Suppliers" to refer to energy suppliers, brokers, and aggregators, however there are very important differences between them all.
The Commission for Regulation of Utilities, formerly known as the Commission for Energy Regulation, is the Republic of Ireland's energy and water economic utility regulator.
