Commentary - Mark Newgent: California dreaming

Unfortunately for Marylanders, the General Assembly adopted O’Malley’s “EmPower Maryland” legislation. “EmPower” codifies into law O’Malley and his environmental fellow travelers’ much-ballyhooed California-style demand-side management (DSM) policies. They are policies supporters claim can bring about a green heaven on Earth of lower electricity bills, green-collar jobs and reduced carbon dioxide emissions.

Last month Malcolm D. Woolf, director of the Maryland Energy Administration, said that California residents use 42 percent less energy per capita than Marylanders, and one overzealous activist on the Chesapeake Climate Action Network blog wrote, “California reduced its energy use by 11 percent in a matter of weeks!” 

Sounds impressive; however, upon closer inspection the Golden State’s energy policies are not so golden.

Analysis of California’s DSM policies by Thomas Tanton of the Pacific Research Institute found that while California flattened its per capita energy use since 1980, it “is not the same as reducing overall consumption or emissions.” In fact, California’s total energy consumption increased 65 percent since 1980.

Last year, due to the increased demand, California ranked in the top 10 for states with one-year increases in carbon dioxide emissions from power plants, using 42.5 million tons, up from 37.8 million tons in 2006. What did California use to satisfy this increased demand? Coal-generated power, environmentalists’ archenemy. According to Tanton, California’s importation of coal-generated electricity rose 60 percent between 1983 and 2005, and now constitutes 10 percent of its total generation.

California’s relative low per capita energy use is not due to its DSM policies, but to several factors Maryland cannot reproduce, such as its mild climate, which significantly reduces the need to cool or heat homes and businesses. Contrary to the green myth that California’s electricity rates are high but overall electric bills are low, the state’s residential electric bills rose 36 percent since 1990.  Furthermore, Tanton’s analysis shows that California’s DSM polices create “razor-thin supply margins, resulting in price volatility and rolling blackouts during periods of peak demand.” Is this what O’Malley wants to bring to Maryland?

Decoupling is one particular DSM scheme the “EmPower Maryland” bill allows utilities to implement. Decoupling allows utilities to separate profits from sales to residential customers. In theory, decoupling removes disincentives for utilities to implement conservation programs. In reality, however, decoupling ensures that utilities pass on the costs of purchasing electricity and maintaining the distribution system, meaning BGE, PEPCO, etc., are guaranteed a return on their investment while customers are still vulnerable to rate increases even if they use less electricity. According to Energy Information Administration data, since California implemented decoupling in 1982 its electricity costs increased 9.98 cents to 12.51 cents per kilowatt hour, an increase of 25 percent. 

Ninety members of the Maryland House of Delegates (all Democrats) voted down an amendment to the “EmPower” bill that would have prohibited utilities from remotely controlling residential thermostats. California floated this idea, but abandoned it. The Senate, in an uncharacteristic moment of good judgment, nixed the idea. However, the final version of the bill sent to the governor for signing contains vague language that could allow BGE to control your thermostat. One hot, sticky day this summer, when BGE lowers your thermostat to reduce demand, through decoupling, it can still charge you the same amount of money as if you were running your air conditioning at a lower temperature. 

Martin O’Malley would have us dream of Californication, but in reality he is “EmPowering” utilities to charge us more for using less electricity. How progressive!

Mark Newgent blogs for Red Maryland http://redmaryland.blogspot.com.