Customer Choice Deserves a Chance
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January 24, 2002

For More Information, Please Contact:
Chrys Wilson, Manager
Office of External Relations
(410) 767-8047

Baltimore, MD - The Maryland Public Service Commission believes that electric customer choice deserves a chance. In so stating, the Commission disagrees with the view expressed by the Office of People's Counsel that residential customer choice should be suspended. The first opportunity for rates to change for residential customers will be July 1, 2004, and hence an additional year of experience will not place these customers at risk.

Commission Chairman Catherine I. Riley stated, "It is too soon to conclude anything about electric choice except that it has been slow to develop in much of Maryland. However, the Potomac Electric territory of Prince George's and Montgomery Counties is actually the third most vibrant area of competition in the country with over 11% of residential customers selecting a competitive supplier and 28% of total load being supplied by an alternative supplier. Clearly, those folks think they are getting a better price and choice has brought them value. This suggests that efforts to abandon choice for residential customers are in fact premature."

Electric choice became available under the law in July 2000 for much of Maryland, but the legislature knew and planned for the fact that transition to choice and creation of a fully competitive, robust market would take time to evolve. The Commission believes the Maryland Legislature gave a well-thought-out roadmap for the Commission to follow. They mandated immediate electric rate reductions for all residential customers, which served to delay some marketer's entry into the State. In July 2001, the Federal Energy Regulatory Commission (FERC) proposed merging the Pennsylvania-Maryland-New Jersey (PJM) Interconnection Grid with that of New York and New England. This further disrupted marketers' entry into Maryland and all PJM area states. Even the successful Pennsylvania choice program was disrupted by this destabilizing proposal. The introduction of such new uncertainties into Maryland's choice program was one of the key reasons the Public Service Commission helped lead the effort to persuade FERC to rethink their risky proposal.

FERC has delayed implementing its proposal and is now performing the requested cost/benefit analysis, while PJM is suggesting market expansion in other areas. This more thoughtful, more slowly evolving process should attract marketers and should prevent cost shifting onto Maryland customers. Chairman Riley added, "We hope that FERC will allow PJM to expand our market rationally into PJM West and beyond and that our market will restabilize soon. This should allow the many marketers already licensed in Maryland to begin to make new competitive offerings and offer other products to Maryland customers. Indeed, this is important now, as over 500 commercial and industrial customers in the Baltimore Gas and Electric territory must choose a new supplier this coming July. They deserve to have options from which to choose, too."

Chairman Riley further stated that "the Commission was charged with fostering electric competition while continuing to protect our citizens with safe reliable service and maintaining the financial integrity of our regulated electric distribution companies." "We are continuing to regulate, provide oversight and work to fulfill each of these missions while monitoring the progress of electric choice on a daily basis. The Commission understands and believes that the transition to a viable competitive market can only be achieved through strong and ongoing regulatory oversight. The Commission hopes there are no further efforts to divert marketers from offering choices here. If the Commission, at an appropriate time in the near future, determines that retail competition is not developing properly, then the Commission will make the necessary recommendations. To talk of abandoning choice now for residential customers, may well create a self-fulfilling prophecy. We think that unwise."


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