Sunday, July 13, 2014

Maryland Power Plants

Nice long overview today in the Baltimore Sun on the situation in Maryland regarding power generation. Turns out our state pays the 13th highest rates in the industry, and though the article dances around the topic, it sounds to me like the bottom line is that it's a monopoly, and they're doing what monopolies do: raise the prices and produce less. In Baltimore we pay a "capacity payments" since the power we import comes along what is apparently a pretty heavily trafficked pathway. PJM Interconnection is the multistate company that manages power grids here, and fewer companies are producing power to supply to their grid. Sometimes those companies-oops! -just happen to overbid on supply contracts, meaning that even fewer producers are eligible to sign up to produce our power for a given year. Financial analysts say that this process gained about $150 million more for Exelon, the owner of BGE.

Environmental regulations are tightening the noose further: as coal plants shut down due to pollution regulation and to facing the low cost of natural gas-based power production, there are even fewer actors in the market, making Exelon's job of maximizing profit even easier.

Because emissions restrictions are part of the issue, one energy producer says that the reason we pay more is because we have "chosen a better air quality" for our citizens. Yeah, right: because pollution emitted upwind doesn't affect us, I guess? The regulations do matter, but they're also a convenient scapegoat.

The good news is that entrants appear to be on the way. Hopefully they are producing in the next few years, and the market can work its magic. Until then, keep your wallets out!

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