What's in Your Meter?
What's in Your Meter?
An Open Letter to Members of the Maryland General Assembly
By trade I am a property manager. For the past 38 years, in a variety of capacities, I have been responsible to property owners for the management and operations of large-scale commercial and residential facilities including energy and utility systems.
A property manager’s job is similar to that of a public official or a journalist. To apply our craft we must know something fundamental about everything that matters in our job while creatively “thinking outside of the box”. However, let us not forget that whether we manage properties for others, establish public policy or write a news breaking story the devil is in the details. To do our duty, for each assignment, we best explore in depth below our thin facade of understanding. Otherwise we will only dig ourselves into a potentially fatal hole.
Since the spring of this year, a priority assignment of mine, has been to understand the new economics of electrical power since the advent of a competitive electrical commodity market. My specific task was to accurately determine the annual cost of electricity for my Condominium Association and Cooperative customers in Montgomery and Prince George counties. Properly preformed each board of directors could confidently approve their annual budgets and establish assessment levels through and beyond 2007.
In completing this task I discovered more than just the devil beneath the surface of Pepco’s electrical rate schedules. I became aware that electrical power generation, transmission and distribution in the Baltimore-Washington region is a synergy and harmony conceived from 4 emerging forces:
1. The supply and demand market for electrical power over a period of time.
2. Decisions by elected public officials that determine, implement and monitor public policy.
3. Guidelines, rules and decisions by responsible state regulator agencies that implement public energy policy.
4. Response, behavior and performance by electric power utility companies to 1, 2 and 3.
I. The Market for electrical power is at a critical crossroad in time and is influenced by five (5) electrical power supply and demand market forces:
1. The growth of electrical power demand and dependency fueled by world and regional demographic trends, expanding electric power applications and uses that honors the culture of unrestraint consumer appetites and entitlements.
2. The fragile fault line between exponential increasing electrical power demands and dwindling energy resources.
3. The changing nature and architecture of global and national power distribution and generation structures.
4, The bifurcation of local electrical power delivery and generation and resultant competitive wholesale and retail energy commodity markets.
5. World events that threaten the future, security and safety of energy sources and resources as well as world population, natural resources and environment.
II. Decisions made by Maryland elected officials in the spring and summer of 2006 will have lasting impact on the success or failure of that State’s transition to a viable competitive electrical commodity market. However, as viewed in Maryland’s public stage, only two factors dominated electrical power policy deliberations over the past 3 ½ years.
One, control of the Maryland’s Public Service Commission and two, a singular focus on a July 1, 2006 electrical rate schedule offering by the Public Service Commission of a 72.1% increase in rate schedules to Baltimore Gas & Electric (BG&E) residential electrical power customers.
The response, divided by political party affiliation, was to fire, appoint and replace PSC staff and commissions and pass legislative affecting only BG&E for failing a percentage change litmus test.
Each electrical power service area in the Maryland Washington D.C. metropolitan region is in differing stages in their market competition and price stabilization plans. Each state’s enabling legislation and the guidelines set by its regulatory commissions determines the retail cost of electricity at each stage of its plan.
Using an inappropriate performance evaluation criterion on BG&E and not Allegheny Power, Delmarva Power or Pepco, the Maryland General Assembly passed harsh economic retribution on BG&E. Its only offense was to follow the legislative and regulatory mandates under the supervision of the PSC to implement its current residential electrical rate tariff schedules.
From 2003 to 2007 the percentage change of average kilowatt hour charges for residential homeowners, ranged from 7.5% to 132.2% in the Baltimore – Washington D.C. metropolitan region. Are not the others also guilty?
III. Public Service Commissions The Public Service Commission at least in Maryland is in need of fundamental reform. The collective paradigm, organizational structure and day to day routine are not much different than when it was first organized in 1907. Examples are the PSC’s record of presiding over the transition to a completive retail electrical market and its stewardship of the electric rate tariff structure.
A. Open Market Price Competition A robust fully competitive market can be a reality with an alignment of the following stars:
The wholesale market prices for electrical commodities approach and/or equal the “Price to Compare” currently being charged.
The Public Service Commission has recruited an energized roster of Alternate Electrical Power Suppliers, also referred to as Energy Service Companies (ESCO), for each and every rate class each of which have in place accessible user friendly competitive programs.
The local power- PSC partnership have established a customer friendly ESCO selection system comparable to buying and selling over e-bay; shopping on line for airline tickets, mortgage refinancing, cars, books and records as well as shopping on-line, over the phone or in person from your favorite retailer.
District of Columbia Pepco is on the margin of retail competitive commodity power market for its residential customers. However, there are no with competitive offerings from alternate electrical suppliers for its residential or small commercial customers or workable system of alternate supplier bidding, selecting or contracting.
Pepco Maryland “Price to Compare” charges are well within the range of the retail generation market. As in the District of Columbia, Pepco Maryland does not have in place any viable pricing programs for residential and small commercial customers nor has the Pepco-MD PSC team established any workable buyer friendly system where residential and small commercial customers can select an ESCO.
BG&E Maryland has also reached a competitive market for its residential customers. Currently, BG&E residential customers can choose from 7 ESCO’s offering competitive bids savings equal to 3% to 11.5% off of the July 1st 2006 rate schedule. However, like Pepco Maryland and District of Columbia customers a workable alternate supplier selection program does not exist.
The July 1st “Price to Compare” (generation and transmission) electrical commodity charges to BG&E residential customers for cost will not change or be affected by recent legislation passed by the Maryland General Assembly. As a result of the legislation all BGE residential customers will automatically enrolled and participate in this Rate Stabilization Plan.
Residential customers will receive a per kilowatt hour credit of 4.577 cents in the summer and 5.052 cents the rest of the year applied to the distribution portion of the bill whether or not a customer selects an alternate supplier. This legislation does not preclude BG&E residential customers from selecting any one of the 7 alternate suppliers offering competitive saving plans.
Dominion Virginia Although Virginia has a number of competitive service providers licensed and registered none are able to offer competitive pricing as steep increases in wholesale power cost continue to prevent additional alternative suppliers into Virginia’s retail generation market. Dominion Virginia customers, through a telephone call to a Dominion’s customer service representative or by logging on to http://www.dom.com/ website can be connected to a “Price to Compare” shopping system of price bidding and ESCO selection.
B. Electrical Tariff Structure The electric rate classification system is economic class system that through its rate tariff deliberations taxes and charges customers for electrical usage. The electric rate class system was originally based on a logical, understandable and fair system that serviced and benefited both the public good and public utilities. In the 80’s and early 90’s rate structure system encouraged and rewarded reduced energy usage from season to season and during peak use periods during the day. Rebates and incentive plans fueled replacement of antiquated, inefficient and environmentally unsound power generation and distribution systems; heating and air conditioning equipment; kitchen appliances and lighting systems.
However, a class system, whether it is social, political or, economic is an artificial pecking order of groups and or individuals. If such as system is to succeed it must be principled based, designed for the public good, with public supported mission, goals and purpose. If not eventually the organization will corrupt and become impotent. That is what is rapidly happening to the electric rate tariff structures.
The allocation of costs and charge appears to be arbitrary manipulated in defiance of long standing principled tariff systems to camouflage, justify and deflect responsibility for steep increases in power supply charges. Under the banner of a competitive electric power market, no longer are there standards of local customer service and electrical power delivery or concern for capability, capacity and condition of the local distribution infrastructures embedded into the tariff logic.
Energy conservations and incentive rebate programs have been removed from the public service partnership rate tariff principles and now found in the self help publications under public relations. The once fair and logical pricing system erodes as the electrical share cost per kilowatt hour of a multi family housing and small commercial customers buying electrical power from Maryland Pepco will pay 36% more than a residential customer on the Residential rate schedule.
IV. Power Companies Responses There is a strange and guarded language embedded into electric power companies’ official announcements about proposed rate changes. While not inaccurate, Pepco and BG&E and respective Public Service Commissions only reveal percentage changes ranges from current to propose schedules, a practice that only breeds confusion, misinformation and distrust.
There is a noticeable absence of user-friendly websites or knowledgeable, empathetic and trained customer phone representatives standing by to relieve the shock of steep rate increases. Nor is there offer of effective tools, resources or ideas that will prepare and protect customers before their summer substitute mail person connects them to Pepco with more than just electrical power.
BG&E displays a public arrogance, air of superiority and rigorousness not uncommon among powerful industrial members in our increasing oligopolistic world economies. This public persona creates barriers to public trust, connected communications and effective customer service. Arrogance and defective communications aside BG&E, (public PCS statements to the contrary), is the first and only electrical power company to reach a competitive commodity market for its residential customers in the region.
BG&E following the mandated legislation and regulatory guidelines stumbled first over the finish line to a competitive retail residential electrical supply market in the region. Unfortunate for BG&E the Maryland General Assembly moved the finish line to the edge of the cliff.
It seems that none of the players in Maryland’s electrical power game explored in any depth the devil’s details before appearing on Maryland’s public power stage. I am remained of the words of the great philosopher Pogo “We have met the enemy and they are us!”
Very truly yours,
Arthur W. Hiban
Certified Property Manager (CPM)
Professional Community Association Manager (PCAM)
An Open Letter to Members of the Maryland General Assembly
By trade I am a property manager. For the past 38 years, in a variety of capacities, I have been responsible to property owners for the management and operations of large-scale commercial and residential facilities including energy and utility systems.
A property manager’s job is similar to that of a public official or a journalist. To apply our craft we must know something fundamental about everything that matters in our job while creatively “thinking outside of the box”. However, let us not forget that whether we manage properties for others, establish public policy or write a news breaking story the devil is in the details. To do our duty, for each assignment, we best explore in depth below our thin facade of understanding. Otherwise we will only dig ourselves into a potentially fatal hole.
Since the spring of this year, a priority assignment of mine, has been to understand the new economics of electrical power since the advent of a competitive electrical commodity market. My specific task was to accurately determine the annual cost of electricity for my Condominium Association and Cooperative customers in Montgomery and Prince George counties. Properly preformed each board of directors could confidently approve their annual budgets and establish assessment levels through and beyond 2007.
In completing this task I discovered more than just the devil beneath the surface of Pepco’s electrical rate schedules. I became aware that electrical power generation, transmission and distribution in the Baltimore-Washington region is a synergy and harmony conceived from 4 emerging forces:
1. The supply and demand market for electrical power over a period of time.
2. Decisions by elected public officials that determine, implement and monitor public policy.
3. Guidelines, rules and decisions by responsible state regulator agencies that implement public energy policy.
4. Response, behavior and performance by electric power utility companies to 1, 2 and 3.
I. The Market for electrical power is at a critical crossroad in time and is influenced by five (5) electrical power supply and demand market forces:
1. The growth of electrical power demand and dependency fueled by world and regional demographic trends, expanding electric power applications and uses that honors the culture of unrestraint consumer appetites and entitlements.
2. The fragile fault line between exponential increasing electrical power demands and dwindling energy resources.
3. The changing nature and architecture of global and national power distribution and generation structures.
4, The bifurcation of local electrical power delivery and generation and resultant competitive wholesale and retail energy commodity markets.
5. World events that threaten the future, security and safety of energy sources and resources as well as world population, natural resources and environment.
II. Decisions made by Maryland elected officials in the spring and summer of 2006 will have lasting impact on the success or failure of that State’s transition to a viable competitive electrical commodity market. However, as viewed in Maryland’s public stage, only two factors dominated electrical power policy deliberations over the past 3 ½ years.
One, control of the Maryland’s Public Service Commission and two, a singular focus on a July 1, 2006 electrical rate schedule offering by the Public Service Commission of a 72.1% increase in rate schedules to Baltimore Gas & Electric (BG&E) residential electrical power customers.
The response, divided by political party affiliation, was to fire, appoint and replace PSC staff and commissions and pass legislative affecting only BG&E for failing a percentage change litmus test.
Each electrical power service area in the Maryland Washington D.C. metropolitan region is in differing stages in their market competition and price stabilization plans. Each state’s enabling legislation and the guidelines set by its regulatory commissions determines the retail cost of electricity at each stage of its plan.
Using an inappropriate performance evaluation criterion on BG&E and not Allegheny Power, Delmarva Power or Pepco, the Maryland General Assembly passed harsh economic retribution on BG&E. Its only offense was to follow the legislative and regulatory mandates under the supervision of the PSC to implement its current residential electrical rate tariff schedules.
From 2003 to 2007 the percentage change of average kilowatt hour charges for residential homeowners, ranged from 7.5% to 132.2% in the Baltimore – Washington D.C. metropolitan region. Are not the others also guilty?
III. Public Service Commissions The Public Service Commission at least in Maryland is in need of fundamental reform. The collective paradigm, organizational structure and day to day routine are not much different than when it was first organized in 1907. Examples are the PSC’s record of presiding over the transition to a completive retail electrical market and its stewardship of the electric rate tariff structure.
A. Open Market Price Competition A robust fully competitive market can be a reality with an alignment of the following stars:
The wholesale market prices for electrical commodities approach and/or equal the “Price to Compare” currently being charged.
The Public Service Commission has recruited an energized roster of Alternate Electrical Power Suppliers, also referred to as Energy Service Companies (ESCO), for each and every rate class each of which have in place accessible user friendly competitive programs.
The local power- PSC partnership have established a customer friendly ESCO selection system comparable to buying and selling over e-bay; shopping on line for airline tickets, mortgage refinancing, cars, books and records as well as shopping on-line, over the phone or in person from your favorite retailer.
District of Columbia Pepco is on the margin of retail competitive commodity power market for its residential customers. However, there are no with competitive offerings from alternate electrical suppliers for its residential or small commercial customers or workable system of alternate supplier bidding, selecting or contracting.
Pepco Maryland “Price to Compare” charges are well within the range of the retail generation market. As in the District of Columbia, Pepco Maryland does not have in place any viable pricing programs for residential and small commercial customers nor has the Pepco-MD PSC team established any workable buyer friendly system where residential and small commercial customers can select an ESCO.
BG&E Maryland has also reached a competitive market for its residential customers. Currently, BG&E residential customers can choose from 7 ESCO’s offering competitive bids savings equal to 3% to 11.5% off of the July 1st 2006 rate schedule. However, like Pepco Maryland and District of Columbia customers a workable alternate supplier selection program does not exist.
The July 1st “Price to Compare” (generation and transmission) electrical commodity charges to BG&E residential customers for cost will not change or be affected by recent legislation passed by the Maryland General Assembly. As a result of the legislation all BGE residential customers will automatically enrolled and participate in this Rate Stabilization Plan.
Residential customers will receive a per kilowatt hour credit of 4.577 cents in the summer and 5.052 cents the rest of the year applied to the distribution portion of the bill whether or not a customer selects an alternate supplier. This legislation does not preclude BG&E residential customers from selecting any one of the 7 alternate suppliers offering competitive saving plans.
Dominion Virginia Although Virginia has a number of competitive service providers licensed and registered none are able to offer competitive pricing as steep increases in wholesale power cost continue to prevent additional alternative suppliers into Virginia’s retail generation market. Dominion Virginia customers, through a telephone call to a Dominion’s customer service representative or by logging on to http://www.dom.com/ website can be connected to a “Price to Compare” shopping system of price bidding and ESCO selection.
B. Electrical Tariff Structure The electric rate classification system is economic class system that through its rate tariff deliberations taxes and charges customers for electrical usage. The electric rate class system was originally based on a logical, understandable and fair system that serviced and benefited both the public good and public utilities. In the 80’s and early 90’s rate structure system encouraged and rewarded reduced energy usage from season to season and during peak use periods during the day. Rebates and incentive plans fueled replacement of antiquated, inefficient and environmentally unsound power generation and distribution systems; heating and air conditioning equipment; kitchen appliances and lighting systems.
However, a class system, whether it is social, political or, economic is an artificial pecking order of groups and or individuals. If such as system is to succeed it must be principled based, designed for the public good, with public supported mission, goals and purpose. If not eventually the organization will corrupt and become impotent. That is what is rapidly happening to the electric rate tariff structures.
The allocation of costs and charge appears to be arbitrary manipulated in defiance of long standing principled tariff systems to camouflage, justify and deflect responsibility for steep increases in power supply charges. Under the banner of a competitive electric power market, no longer are there standards of local customer service and electrical power delivery or concern for capability, capacity and condition of the local distribution infrastructures embedded into the tariff logic.
Energy conservations and incentive rebate programs have been removed from the public service partnership rate tariff principles and now found in the self help publications under public relations. The once fair and logical pricing system erodes as the electrical share cost per kilowatt hour of a multi family housing and small commercial customers buying electrical power from Maryland Pepco will pay 36% more than a residential customer on the Residential rate schedule.
IV. Power Companies Responses There is a strange and guarded language embedded into electric power companies’ official announcements about proposed rate changes. While not inaccurate, Pepco and BG&E and respective Public Service Commissions only reveal percentage changes ranges from current to propose schedules, a practice that only breeds confusion, misinformation and distrust.
There is a noticeable absence of user-friendly websites or knowledgeable, empathetic and trained customer phone representatives standing by to relieve the shock of steep rate increases. Nor is there offer of effective tools, resources or ideas that will prepare and protect customers before their summer substitute mail person connects them to Pepco with more than just electrical power.
BG&E displays a public arrogance, air of superiority and rigorousness not uncommon among powerful industrial members in our increasing oligopolistic world economies. This public persona creates barriers to public trust, connected communications and effective customer service. Arrogance and defective communications aside BG&E, (public PCS statements to the contrary), is the first and only electrical power company to reach a competitive commodity market for its residential customers in the region.
BG&E following the mandated legislation and regulatory guidelines stumbled first over the finish line to a competitive retail residential electrical supply market in the region. Unfortunate for BG&E the Maryland General Assembly moved the finish line to the edge of the cliff.
It seems that none of the players in Maryland’s electrical power game explored in any depth the devil’s details before appearing on Maryland’s public power stage. I am remained of the words of the great philosopher Pogo “We have met the enemy and they are us!”
Very truly yours,
Arthur W. Hiban
Certified Property Manager (CPM)
Professional Community Association Manager (PCAM)
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