Report to General Assembly should reinforce finding that competitive generation is lower cost than utility-owned, OPC tells PSC
BALTIMORE – A preliminary report on generation procurement models gets a crucial observation correct: Utility-owned generation exposes ratepayers to significantly higher costs and risks compared to models that depend on competitive independent power producers, the Office of People’s Counsel told the Public Service Commission (PSC) in a presentation this week.
The preliminary report from PowerAdvisory, an outside consultant engaged by the PSC, correctly highlights that utility ownership exposes customers to capital cost overruns, operational risks, and performance uncertainties over the 30- to 40-year life of the asset, OPC told the PSC, noting that all those risks can be absorbed by private developers in competitive procurements.
“Unlike competitive entities, utility monopolies have the advantages of incumbency and access to ratepayer-funded resources, and they can shift cost overruns and long-term market pricing risks onto captive ratepayers,” Maryland People’s Counsel David S. Lapp said. “Those structural advantages place undue burdens on captive utility customers, chill private investment, crowd out independent developers who deploy private capital, and distort competitive markets.”
OPC’s comments—delivered in written form last month—came as part of a PSC technical conference reviewing the preliminary report that the 2025 Renewable Energy Certainty Act (RECA) required the PSC to prepare on different models for procuring generation. Among other requirements, the study must “prioritize potential procurement models ... that have little or no impact on customer rates.”
OPC’s comments to the PSC pointed out that the utilities’ contention that they have lower capital costs than competitive generators is evidence of the added risks of utility-owned generation for customers; any lower capital costs for utilities simply reflect the risks customers—rather than investors—take on for uncertain future market prices and construction or operational cost overruns when utilities own power plants.
OPC also encouraged the final report to account for the risks of procuring generation when market prices are high, which could lock ratepayers into paying for excessive long-term costs.
The preliminary report follows several rounds of stakeholder input and will inform the report that the PSC must submit to the General Assembly by December 1, 2026.
For more on the risks and harms of utility-owned generation, see OPC’s testimony before the General Assembly.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers in electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies, and the courts.
* * *
|
