Another Energy Tax

Two Montgomery County state Senators, Rob Garagiola and Roger Manno, both Democrats have introduced legislation that will increase Maryland utility bills.

SB 304 establishes a $0.0013 per kilowatt hour renewable energy surcharge on residential retail utility customers who exceed 1,000 kilowatt hours of usage a month. The Public Service Commission would authorize utilities to place the surcharge on customer bills and place the funds in the Maryland Renewable Energy Benefit Fund.

The fund will then redistribute money to Maryland’s solar, wind and geothermal grant programs, efficiency, and renewable energy programs.

Utilities may rebate charged customers, who choose to purchase electricity purchased from a Tier 1 renewable energy source, $0.01 per kilowatt hour. Maryland’s Renewable Portfolio Standard (RPS) defines Tier 1 sources as: solar, wind, biomass, landfill and waste water methane, geothermal, ocean energy from waves, tides, currents, fuel cells powered by methane or biomass, and small hydroelectric plants, and poultry-litter incineration facilities.

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Maryland’s RPS law—increased by Governor Martin O’Malley in 2008—mandates state utilities generate 20 percent of their retail electric sales from renewable sources by 2022. Renewable energy sources are more expensive to generate and transmit. Studies in Massachusetts, Montana, and North Carolina, have shown those RPS laws lead to higher utility rates and cost ratepayers millions of dollars. Given that Maryland generates 60 percent of its electricity from coal the state’s RPS mandates are sure to similarly hike utility bills.

In 2009, former Governor Arnold Schwarzenegger increased California’s RPS mandate to 33 percent renewable energy by 2030 because the Golden State’s utilities could not meet the original RPS mandate of 20 percent by 2010. California had to implement special feed-in tariffs for renewable energy sources to spur their use.

It appears that Garagiola and Manno’s legislation is a tax designed to prop up an unachievable government mandate.

O’Malley is expected to introduce legislation mandating state utilities enter into long-term contracts to purchase offshore wind energy. In addition to mandating utilities purchase costlier and unreliable wind power, the legislation would help ensure a return for Google on its multibillion dollar investment in a Mid-Atlantic offshore wind transmission grid. Also, the mandate could possibly benefit the energy company run by O’Malley’s former chief of staff Michael Enright. Enright left the O’Malley administration in 2010 to become managing director of Beowulf Energy, which is one half of the Maryland Offshore LLC partnership vying for federal leases for offshore wind projects.

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