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Electricity rates likely to drop next summer

Starting next summer, customers of the four largest power utilities in Maryland should see some hefty decreases in what they pay for electricity.

Baltimore Gas and Electric Co., Allegheny Energy Inc., Delmarva Power & Light and Potomac Electric Power Co. presented their estimates for electric costs to the Maryland Public Service Commission on Thursday. From June 2011 through May 2012, the average annual residential default, or “standard offer service,” rate is expected to decrease as much as 14 percent.

“For the first time ever, we’re seeing double-digit decreases,” said Phillip E. VanderHeyden, director of electricity at the PSC.

Each June, electric supply rates are adjusted to reflect the cost of power the companies buy for customers who do not contract with an alternative supplier. This allows the power companies to know how the bulk of their portfolio will be priced.

On Monday, the companies received bids for power from June through May. PSC Chairman Douglas R.M. Nazarian said the commission’s order approving or denying the bid would be released Friday.

Craig R. Roach, president of energy consulting firm Boston Pacific Inc. told the PSC he was in favor of the bids that were received. He said low commodity costs and other factors drove prices down.

“We expected prices to fall and they did fall significantly,” Roach said. “We think that bodes well for rate decreases.”

BGE customers can look for as much as a 12 percent reduction in their annual bills. The average annual residential bill — now $1,836 — should drop to $1,634 starting next year.

It would be the highest decline in annual electric costs since 2005.

After market pricing was introduced and rate caps came off in July 2006, BGE customers saw a 72 percent increase. Since then the average annual price for electricity has increased from $1,033 in 2005 to a high of $2,004 in 2009. Prices have come down about 15 percent over the last two years.

“We’re pleased to see that the numbers are going down,” said Paula M. Carmody, who heads the Office of the People’s Counsel, an independent state agency that represents Maryland’s residential consumers in electricity rate cases. “We are seeing declines in the wholesale markets, so it’s not a surprise but, we’re still pleased to see the decline.”

Allegheny Energy customers not on its rate transition plan should see an annual power bill of $1,595, a 12 percent decrease. This means a possible reduction of $187 a year compared to the current year’s bill.

Pepco’s Maryland customers can expect to see a bill that is $277 less per year than what they are paying now, a 15 percent decrease. The current average bill for residential customers now is $1,806.

Delmarva Power & Light customers should see their annual bill go down about 12 percent, starting in June 2011. The average bill now for residential customers is $1,806, which should drop to $1,529 next year.

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