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O’Malley takes new tack on wind

Nicholas Sohr//Daily Record Business Writer//January 23, 2012

O’Malley takes new tack on wind

By Nicholas Sohr

//Daily Record Business Writer

//January 23, 2012

ANNAPOLIS — Gov. Martin O’Malley’s second try at legislation to foster development of an offshore wind energy farm includes what he has billed as stronger protections for power customers and more palatable requirements for utility companies.

The governor called the new wind bill “a reasonable approach that caps exposure for ratepayers and yet sends a clear signal that Maryland’s serious about harnessing Atlantic offshore wind.”

The bill was part of the governor’s legislative agenda that he sent to the General Assembly Monday night.

Headlined by the wind effort and a bill that would extend marriage rights to same sex-couples, the legislative package also includes an increase to the state’s “flush tax” to pay for sewage treatment plant upgrades, an effort to spark more private investments in public infrastructure and a bill that O’Malley said is designed to speed commercialization of discoveries made in labs in the state.

“One of the common themes that you see throughout most of the initiatives is the importance of making the modern investments that a modern economy requires in order to create jobs,” the governor said.

O’Malley’s proposal calls for the “flush tax” to move from an annual $30 fee to a progressive tax based on water usage to raise an additional $63.5 million in the coming year.

The same-sex marriage bill includes greater protections for religious organizations than the proposal that passed the Senate last year, but failed in the House of Delegates.

“A key piece of that debate will focus around religious freedoms and the satisfaction that members of the General Assembly have that churches, synagogues, faiths will be free to define sacraments however they wish,” O’Malley said.

The governor’s wind bill was hailed by environmental groups and was greeted with cautious optimism from lawmakers who spiked last year’s version.

“There are a lot of pluses in going forward with this,” said Sen. Thomas M. “Mac” Middleton, chairman of the Senate Finance Committee that will handle the wind legislation. “But on the other side is what are the costs to consumers?”

O’Malley’s staff built protections into the new bill that they hope would keep costs low for consumers as the state spurs development of a 450-megawatt wind farm.

The legislation will piggyback on Maryland’s renewable energy generation requirement that 20 percent of the state’s energy be generated from renewable sources by 2022.

The bill would dedicate a slice of the renewable energy mandate to offshore wind power to create a guaranteed level of demand for that energy source, putting the burden on electricity suppliers rather than on the utilities that resisted last year’s proposal.

Suppliers would have to buy “ocean renewable energy credits” from wind energy providers approved by the Public Service Commission.

O’Malley’s proposal includes four hurdles that wind farm developers would have to clear before gaining PSC approval.

The PSC would deny any wind farm application that would cause average residential power bills to rise $2 or commercial and industrial bills by 2.5 percent in any month over the next two decades.

The cost of offshore wind credits would be capped at $200 per megawatt-hour. Revenue from the sale of the actual offshore wind power, capacity charges and other sources would be used to offset some of that cost.

The developers would also have to pass a “net benefit test.” The jobs created, anticipated tax revenue, and health and environmental benefits would have to outweigh the higher power bills Marylanders would see.

“That doesn’t mean the ratepayers would pay less,” said Middleton, D-Charles. “It means any increases would be offset by the benefit to the whole state.”

A transportation funding proposal was notably absent from the governor’s initiatives introduced Monday. O’Malley said his administration is “still working” on the proposal, which, he added, could support thousands of new jobs and unclog area roads.

“The alternative is to not do that, in which case we won’t create as many jobs, in which case we’ll all grow old, sitting in traffic and waiting for the tooth fairy to come and build new infrastructure,” the governor said. “The tooth fairy isn’t going to build new infrastructure. These are only things we can do as a people. That’s not a Democratic opinion. That’s an American fact.”

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