O'Malley touts Montgomery program in energy speech

Governor promotes new generation, renewables

The state will pool resources with Montgomery County, Baltimore city and the University of Maryland to leverage its purchasing power in securing clean energy projects. The pledge for more renewables drew the only interruption for applause during O'Malley's 28-minute address.

"We believe that we can make our state the national leader in renewable energy and we plan to move forward toward making our state one of the very first in the nation to use its market power to jumpstart large-scale commercial renewable energy projects," he said.

The state last week formally offered to purchase hundreds of megawatts of electricity from renewable energy needs, he said. "By offering long-term contracts for clean, renewable power, we can accelerate the arrival of more commercial-scale projects like Delaware's offshore wind farm or proposals for an Eastern Shore power plant that's powered by poultry litter."

The partnership between state and local governments and non-governmental institutions is the first of its kind, Maryland Energy Administration Director Malcolm D. Woolf said. The governor also pitched the partnership to other county leaders at the MACo conference, he said.

Currently, the state is looking to purchase about 200 megawatts of power, which would be enough to power 200,000 homes annually, Woolf said. It will likely cost more up front than buying traditional electricity, he said, but the security of long-term renewable power contracts will pay dividends in the volatile commodities marketplace.

"We know that coal and natural gas are global commodities where the price can go up," Woolf said. "The sun always shines, and the wind always blows. The cost of renewable energy does not go up."

The partnership is part of a six-pronged approach that O'Malley outlined on Saturday to averting electricity blackouts as early as 2011.

"We cannot stand idly by and wait for market forces or the electricity good fairy to come in and solve this problem for us," he said. "All of the experts are telling us that demand is outpacing supply and we know that there's no new generation coming online. We have to do something about this now or the rolling brownouts and blackouts will happen."

Montgomery County adopted legislation in 2004 that required them to buy at least 5 percent of its energy from renewable sources. It doubled the minimum requirement to 10 percent in 2006.

The long-term savings is worth the higher upfront cost, said Eric Coffman, senior energy planner for the county's Department of Environmental Protection. "We're actually paying a premium for that clean energy supply," he said. "We're doing it for environmental greenhouse gas reduction."

Pooling their resources should enable the state to get lower rates, he said. "The main goal for us is working with the state to get a long-term clean energy supply at very favorable rates to the county governments and the state, because going just on our own, we don't have the purchasing power that the state does."

The state also hopes the commitment towards clean energy will lure a utility to build a renewable plant here.

The emphasis on renewable power won plaudits from Jim Lanard, head of strategic planning and communications for Bluewater Wind, an offshore wind farm developer with offices in Delaware, New Jersey and Rhode Island.

"The only way in Maryland that renewable power gets built is offshore wind," he said. "There's just not enough land mass to build land-based wind power. Solar works on a house-by-house basis unless you build solar farms in the west, so what we're looking at is wind, and Maryland, like Delaware, is really the Saudi Arabia of wind power."

In addition to renewables, Maryland must embrace new generation opportunities and promote the use of "smart meters" that reduce consumption to secure its energy future, O'Malley told several hundred county officials.

His plan to combat the energy shortfall acknowledges that wholesale re-regulation will be a tough sell in the legislature because of the high up-front cost to purchase power plants from the utility companies.

The governor's proposals, however, will also likely result in even higher electricity bills at a time when ratepayers have recently been hit by post-deregulation price spikes as artificial rate caps expired. That, or the blackouts that are predicted if nothing is done, could be political liabilities for O'Malley as he faces re-election in 2010.

"I know how much all of us wish that there were simple cost-free solutions to this complex problem, but our shared reality is not simple and it is not cost-free," he said.

Energy policy has been a common theme during the first 18 months of the O'Malley administration, from appointing four new Public Service Commission members to launching an ambitious effort to reduce consumption 15 percent by 2015. The state has also waged war with Constellation Energy Group, the parent company of Baltimore Gas & Electric, over the return of energy credits and ratepayer reimbursements that stemmed from deregulation.

But fulfilling long-term energy needs has proven to be complicated. The state is supporting Constellation's efforts to build a third reactor at Calvert Cliffs Nuclear Power Plant in Lusby, but it isn't expected to be ready until at least 2015. Prospects for extending transmission lines that would supply electricity from outside the Mid-Atlantic grid are slow-moving.

And O'Malley said it was important that government play some role, rather than wait for market forces to restore the supply-and-demand imbalance.

"Free markets alone will not secure that future," he said. "If we want a more secure, more renewable and more affordable energy future, then there are things that we must do together to bring about that stronger future that we prefer."

Newly appointed Public Service Commission Chairman Douglas R.M. Nazarian said his agency will strive to put the governor's ideas into practice. "We are going to take control of our own destiny, our own future and … we are not going to sit back and let the markets solve the problems that we identify."

However, Sen. E.J. Pipkin, a leading voice on utility issues in the General Assembly, said government's role should be restricted. He opposed O'Malley's plan for local governments to use the bonding authority of Maryland Environmental Services to build "peaking plants," or locally-controlled generation facilities that can produce electricity for a small community. One such project is under consideration in Thurmont.

"I see no role for a government agency that continues to struggle to meet its core competency of running water and sewer plants in Maryland being used for energy usage," said Pipkin (R-Dist. 36) of Elkton. "This expansion of creating czars in the government, which is what we've seen over the last two years, is not something that's good. Creating a new agency involvement in direct building of power plants is not something that I think is constructive. I think the private market does have a place in the system and I think that's one proposal that I had some problems with."

Still, Howard County Executive Kenneth S. Ulman said the consensus to tackle looming energy problems crosses party lines.

"No matter what your political ideology is, I'm finding people across the spectrum are very focused at this moment either for global warming issues or for foreign oil issues or for homeland security issues that we've got to be generating local power," he said.

O'Malley also pledged to provide more financial assistance for low-income families and promote energy-efficient appliances.

The governor's speech was largely on target, said Robert L. Gould, a Constellation spokesman.

"The governor clearly appreciates the fact that there are no easy solutions and that we must look at many alternatives to meet our future energy needs," he said in a statement. "… Key to any solution set must be the ability to balance affordability, reliability and sustainability — all of which are critical to making Maryland an attractive place for future energy investment."