Maryland Makes A Careful Choice

As electricity deregulation sweeps the country, some states are taking steps to protect consumers from getting closed out of newly open markets.

Saturday, reports CBS News Correspondent Thalia Assuras, Maryland became the latest state to let consumers choose their electric company.

The idea behind allowing choice is that when energy producers must compete, users pay less, but individual consumers aren't supposed to be the only beneficiaries.

The nationwide move toward deregulation comes at a time when the demand for electricity is quickly outpacing supply. With the onset of summer and the use of energy-guzzling air conditioners, power companies are warning that brownouts are inevitable. One reason is the shortage of new power plants. Deregulation, it is hoped, will improve power capacity by encouraging power companies to build new plants.

"They're going to have to be able to deliver that power more efficiently, so that they can get it to consumers at a lower cost," said Joe Marsilii of Potomac Electric Power Co. or PEPCO.

But with profits now driving a deregulated utility market, there's a worry that home users may prove to be unwelcome consumers because they are difficult to serve.

"They are more expensive to serve, they are more expensive to acquire…and their usage differs from that of an industrial customer, because it goes up and down," explains Michael Travieso, Maryland People's Counsel.

To protect Maryland consumers during the transition, they're being guaranteed a 7 percent price reduction that will be frozen for at least four years. That gives new power companies time to peddle their wares and consumers time to choose their new supplier.

The price is now so low not one of the new companies licensed by the state can offer a cheaper price. But that's expected to change.

And for consumers worried about whom to call if the power goes out, there will be no changes. The same company that repairs the lines today will repair them in the future.

"When you flip your light switch, the lights still come on," promises Marsilii.

Ironically, as prices drop with deregulation, consumers may start using more and more electricity, which might be good for consumers' pocketbooks but bad news for an industry struggling to keep the power flowing.

It's clear that not every kink has been worked out of the Maryland power scheme.

Maryland's highest court Saturday issued an order halting the start of electric deregulation and an accompanying rate cut in the greater Baltimore area served by Baltimore Gas and Electric Co., which serves about 1 million customers in Baltimore and the five surrounding counties.

Court of Appeals Chief Judge Robert M. Bell acted on an appeal from the Mid-Atlantic Power Supply Association, a group of electricity suppliers.

The group contends that the terms of deregulation in the BGE service area, approved in November by the Maryland Public Service Commisson, favor BGE and would not allow successful competition for residential customers.

The judge's order also prevents a 6.5 percent rate cut that was part of the plan from taking effect.

MAPSA says deregulation goes ahead as scheduled in areas served by PEPCO, Allegheny Power and Conectiv Inc.