An electrical substation and a high-voltage electric line. Photo courtesy U.S. Department of Energy.
Power prices are rising and poised to rise further in the wholesale power market, known as PJM, that includes Maryland, with a vigorous debate over the root causes. As a result of this shift in the wholesale market, the Office of People’s Counsel is forecasting a nearly 20% retail bill increase for Baltimore customers next year. This projection assumes that these wholesale prices will more or less automatically pass through to retail customers.
Which is interesting because, as an energy professional myself, I know of at least one customer who will not see any price increase at all as a result of all the recent power-market drama: Me.
The wholesale energy markets can be a roller coaster. But there is no reason for residential customers to get on that ride unless they choose to. For now, customers can and should consider locking in a retail rate that gets them through the next couple of years.
For more than two decades, Maryland has had a policy of retail electric customer choice. That policy gave me a choice I exercised by logging on to mdelectricchoice.com, a website sponsored by the Maryland Public Service Commission. There, I found a five-year, fixed-rate contract that locks in the price of my energy supply. My price under this contract is 9.9 cents per kilowatt-hour. If the recent wholesale price increases are any guide, this plan is going to save me a couple thousand dollars, and the price I pay for energy supply on my utility bill will not change until mid-2029.
Big energy suppliers seek to derail new Md. consumer protection law
Now the bad news. Starting on Jan. 1, 2025, other Maryland customers will no longer be allowed to make the choice that I made. Earlier this year, Maryland’s General Assembly passed a restrictive law, Senate Bill 1, that prevents competitive suppliers from offering any contract to residential customers that is longer than one year in length.
This law does not affect small and large businesses, who will retain their options to lock in a long-term rate. But Maryland lawmakers evidently believed that residential customers could not be trusted with the same choice. It was better, these lawmakers reasoned, to force these residential customers onto utilities’ so-called Standard Offer Service in the name of customer protection. They apparently viewed the Standard Offer Service as a “safe” product.
Ironically, that “safe” option is one whose price will change more rapidly in response to wholesale market conditions. Having been deprived of an alternative choice, Maryland ratepayers will now be taking a ride on the roller coaster, whether they like it or not.
Maryland lawmakers also imposed a price cap on retail energy products — but not on utility Standard Offer Service. The price cap for nonutility options is tied to the historical average of utility-backed pricing. But this makes no sense, because the wholesale price increases we are seeing are taking hold largely in the future. The effect is to deprive customers of the very option that would protect them when wholesale prices are volatile and rising.
Where this same policy has been enacted elsewhere, in New York, it has resulted in more customers being exposed to more volatile prices and, ultimately, higher bills than neighboring states that had other options available. The same thing will happen in Maryland.
Even before its Jan. 1 implementation date, the negative effects of SB 1 are being witnessed.
The supplier whose offer I selected? It’s no longer making any offers on the mdelectricchoice.com website. It has taken its business elsewhere. Maryland has created needless regulatory uncertainty, and the consequence is that my choice is no longer available to other consumers.
There are still a few deals to be had, and consumers should explore the market in the next several months to sign contracts that can be grandfathered from this misguided law. Because, come January — unless the legislature changes its mind — the choices that Maryland residential customers today enjoy are going away, quite possibly forever.