This content was republished with permission from WTOP’s news partners at Maryland Matters. Sign up for Maryland Matters’ free email subscription today.
Anne Manuel and her husband have been willingly paying an extra $1,000 a year to power their Silver Spring home and a cabin they own in Western Maryland, assuming contentedly that 100% of the energy was being generated from a Maryland wind farm.
“I’m deeply concerned about the threat climate change poses to our world,” Manuel told the House Economic Matters Committee during a hearing in Annapolis on Thursday. “That’s why my husband I are willing to pay more for renewable sources.”
Despite assurances from WGL Energy about the origin of the energy, Manuel recently came to learn that the premium she was paying wasn’t going directly to a nearby supplier. Instead, it was being used by the utility to purchase clean energy credits from out-of-state renewable energy suppliers.
“We recently learned these claims are misleading,” she said. “They’re not buying wind power on our behalf. We’re getting the same mix of grid supply energy as our neighbors who have not opted for 100% clean energy. Instead, we’re paying a steep premium for [credits] rather than the energy itself.”
Explaining how this came to be is complicated, as so much of Maryland utility law is. It stems from the 1999 deregulation of the state’s electric sector, which offered consumers the option of choosing a supplier in the name of competition. Some consumers decided to shop for lower prices; others chose to pay a premium in order to buy cleaner energy. Doing nothing meant the traditional regulated electric utilities, like Pepco and BG&E, supplied the power.
Over the past 20 years, there have been numerous debates in Annapolis over whether deregulation has worked. Some lawmakers and consumer advocates say the introduction of unregulated suppliers into the state marketplace has led to predatory practices and higher prices. Others believe the 1999 legislation didn’t go far enough, and that consumers won’t realize greater savings until the state’s electric market is fully deregulated.
Maryland lawmakers have also established a system that enables utilities to purchase renewable energy credits, known as RECs — a tradable commodity equal to one megawatt-hour of electricity generated or obtained from a renewable energy source. But the law is vague on where the energy must come from and how it is delivered to Maryland homes, leading to the occasional situation where consumers like Manuel believe they are buying clean energy directly from a local supplier.
A bill in the House of Delegates aims to change that. Sponsored by Del. Dana Stein (D-Baltimore County), vice chair of the House Environment and Transportation Committee, the measure would require electricity suppliers that claim to be providing clean energy to purchase power only from specific renewable energy sources within the region served by Maryland’s electric transmission supplier. And it would require the companies to plainly disclose to the Maryland Public Service Commission, which regulates utilities, where the energy is coming from.
Stein said he, like many ratepayers, receives frequent solicitations to switch his electricity supplier to a company that claims to be using clean energy.
“I wondered, how do we know that this supplier, or anyone else who advertises 100% pollution-free clean energy, is indeed sourced from RECs that are clean and renewable and pollution-free?” he said.
The bill is as much about shady marketing as it is about the energy sources themselves, supporters of the legislation said.
“I get a lot of questions about these green bill offers,” said Laurel Peltier, a consumer advocate with AARP Maryland. “It’s hard to tell what you’re getting because there are no marketing qualifications. People are paying enormous mark-ups when they think they’re getting clean energy. That’s what people think they’re paying for.”
The Public Service Commission supports the legislation. Kevin Mosier, the assistant director at the PSC, called it “a very feasible bill.”
But lobbyists for Vistra and NRG, two major energy suppliers that have backed previous legislative efforts to further deregulate electric utilities in Maryland, pushed back, saying that while they understood the desire to crack down on unscrupulous marketers, the bill has unintended consequences.
“The claims that [the advocates] made in their testimony are not accurate,” said John Fiastro, representing NRG.
Katie Nash, the Vistra lobbyist, discussed the technical aspects of the legislation and its potential practical impacts in the marketplace.
“House Bill 1214 would create a new definition of green power that contradicts the definition in existing law,” she said. Nash added that the legislation would stymie competition and innovation and hamper the state’s eventual transition away from fossil fuels.
“The decision made by this body in 1999 was forward-thinking and opened the doors to allow the energy innovators to advance and prepare for Maryland’s clean energy future,” she said.
But Economic Matters Committee Chair C.T. Wilson (D-Charles) attempted to move the conversation away from technical issues like renewable energy credits and wanted to focus instead on companies that prey on consumers.
“You know who doesn’t understand RECs?” he said. “Most everyone in this room and everyone else out there.”
Wilson later referred to RECs as “a shell game,” and summed up the bill supporters’ argument this way: “Their intention is to make sure that people who were lured into buying that type of energy should be told the truth.”