An Environmental Mandate
David S. Lapp recently began his term as Maryland People’s Counsel, and Delegate Marc Korman was the sponsor of the Office of People’s Counsel Environmental Reform Act.
With growing public demand for clean energy and the evidence of climate change all around us, state and federal utility regulators are considering policies to decarbonize our energy systems. Policies decided by the Maryland Public Service Commission and Federal Energy Regulatory Commission will help determine whether Maryland meets its greenhouse gas reduction goals and consumer demand for clean energy — and how decarbonization is paid for.
Recognizing that the environment is a consumer issue in these regulatory proceedings, the Maryland General Assembly passed — and the Governor allowed to become law without his signature — the Office of People's Counsel Environmental Reform Act (House Bill 30).
House Bill 30 amends the authorizing statute for the Maryland Office of People's Counsel (OPC). For nearly one hundred years, OPC has been tasked with representing Maryland's residential consumers in utility regulatory matters before federal and state agencies and courts — primarily aiming to keep residential customer utility bills low.
HB 30 now requires OPC to factor into its consumer advocacy Maryland's environmental interests, including its progress toward meeting its greenhouse gas reduction goals. The bill requires new OPC staff, authorizes the hiring of experts, and gives the People's Counsel a seat on the Maryland Climate Change Commission. The bill also adds Maryland to a short list of states with consumer advocate statutes that expressly incorporate an environmental mandate.
OPC will take its strengthened mandate to the PSC and FERC as they decide key policy issues. Customers want and will benefit from decarbonization, but they need effective representation before regulatory agencies.
David Lapp: OPC will advocate for a market structure that promotes innovative decarbonizing technologies and ensures they are provided cost effectively.
Investments of billions of dollars should reflect the merits of the investments — not what is most profitable to utility shareholders. Regulators should pursue policies that effectively advance environmental goals, while ensuring that residential customers do not bear unnecessary or unreasonable infrastructure costs.
Consumer advocates and environmentalists need to coalesce around mutually beneficial utility policies. Consider three current topics:
Distribution grid upgrades: The local electric distribution system needs transformation — a need the PSC recently acknowledged in starting a new proceeding on the topic. The climate-friendly energy sector of the future will incorporate emerging technologies, including distributed energy resources such as local and rooftop solar, energy efficiency, microgrids, energy storage, and demand aggregators, as well as other — perhaps unforeseen — technologies.
The future of natural gas: For residential and commercial buildings, natural gas accounts for more than seventy-five percent of Maryland's direct greenhouse gas emissions. Despite this climate-change contribution, Maryland's gas utilities are investing billions in expanded infrastructure. Regulators should weigh short-term benefits against the environmental costs of increased fossil fuel use — and the risk to consumers that they will be asked to pay for additional infrastructure that carbon policies render obsolete.
Marc Korman: The bill also adds Maryland to a short list of states with consumer advocate statutes that expressly incorporate an environmental mandate.
Transmission grid: At the federal level, Congress and regulators anticipate spending hundreds of billions of dollars in new transmission infrastructure to facilitate decarbonization. As FERC recently observed, the electricity sector is transforming as electric generation shifts to renewable energy resources located far from population centers.
FERC's clean energy efforts are critical to Maryland's climate mitigation and renewable energy goals; they also carry a major consumer price tag, as FERC-regulated costs already account for roughly sixty percent of a typical Maryland residential customer's electric bill.
How state and federal regulators address these and other issues will influence Maryland's ability to meet its environmental goals and utility customers' bills for many years to come. Will the state meet its current goal of reducing greenhouse gas emissions by fifty percent from 2006 levels by 2030?
Will Maryland be an early adopter of clean, distributed energy resources like microgrids and storage? Who will pay for all the development? What services should be controlled by utility monopolies? Should policymakers foster new entrants and competition?
Backed up by HB 30, OPC will analyze these issues and advocate for a market structure that promotes innovative decarbonizing technologies, makes them available to residential consumers, and ensures they are provided cost effectively. Objective, fact-based, and data-driven analysis will drive OPC's work.
OPC will strive — as regulatory policy must — to identify and advocate for the most effective, legally supported, policy solutions that simultaneously further citizen interests in both environmental protection and cost-effectiveness.
