Dear Chamber Members,
Governor Hogan on Friday, May 24, 2019 elected to not sign the bill passed on the last day of this year’s legislative session, increasing the Renewable Energy Portfolio Standard for electricity suppliers serving Maryland customers from 25% to 50% by 2030. Based on state law the bill can go into effect without his signature.
The article below appeared in the Baltimore Sun and outlines the legislation and the Governor’s position on renewable energy.
CQI strongly objected to this legislation since the additional cost will be passed on to the customer and the jobs proposed to be created will be in other states, due to a lack of land area in Maryland to build renewable projects.
We recommended the Governor veto the bill.
Recently passed Renewable Energy Portfolio Standard legislation in other states and the District of Columbia has resulted in immediate price increases of 14% to 18%. The price increase in the District of Columbia has been over one cent per kWh, based on recent competitive bids conducted by CQI.
Based on preliminary information, the legislation may provide a grace period “Grandfather Clause”. This period would possibly allow any new contracts signed prior to October 2019 to be exempt from any rate increase until the end date of the new contract.
For more information about ways you can shield yourself from the upcoming rate increase call Joe Tabeling of CQI Associates at 443-472-3870 or email joe@cqiassociates.com
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Hogan will allow energy bill to become law
Legislation mandates 50% renewable sources by 2030
By Scott Dance
The Baltimore Sun
Half of Maryland’s energy will come from renewable sources by 2030 under a bill that is set to become law Friday — without Gov. Larry Hogan’s signature.
The General Assembly passed the measure last month, requiring utilities in the state to subsidize solar and wind farms. Controversially, it also maintains incentives for trash incinerators and paper mills even though they generate pollution and greenhouse gases.
The legislation brings Maryland to the forefront of states using energy policy to promote investment in green technology. The state joins seven others with renewable energy goals of 50% or more, designed to reduce dependence on fossil fuels and thus ease greenhouse gas emissions.
Because green energy sources are more costly, the policy is expected to make Marylanders’ electricity bills more expensive — an estimated $1.50 per month for the typical residential customer, on average, according to state legislative analysts.
It is among almost 300 bills that are expected to become law without Hogan’s signature Friday, because he canceled a bill signing that was scheduled for Thursday. Other measures would create a board to monitor prices for prescription drugs, ban most foam food and drink containers and dissolve the state’s Handgun Permit Review Board.
Critics say the bill known as the Clean Energy Jobs Act doesn’t do enough to combat climate change, and that it doesn’t guarantee that the tens of millions of dollars of subsidies paid out each year translates to jobs in Maryland. Three-fourths of Maryland’s green energy supply came from outside the state in 2017, and much of it came along with carbon emissions and pollution.
Hogan said he would not sign the bill because of those concerns. Under state law, bills sent to the governor at the end of the General Assembly’s annual legislative session become law after 30 days if the governor does not sign or veto them.
“Despite its name, this bill is not clean enough, nor smart enough, nor does it create the intended jobs within Maryland,” he wrote in a letter Wednesday to Senate President Thomas V. Mike Miller.
But Hogan said he endorses its larger goals — and also expressed his support for expanding the mandate to 100% clean energy by 2040. The legislation requires the state to study how to reach that goal, including whether to make nuclear power eligible for ratepayer subsidies.
He even gave the renewable energy incentive program a new name — the Clean and Renewable Energy Standard — and said he would push for competition in the industry to limit costs for ratepayers.
“Our CARES plan will get us to zero carbon emissions, rather than just increasing the quotas for dirty energy and outdated technologies,” Hogan wrote. “This better and bolder goal is what our state should be striving for as we continue to set an example for the rest of the nation.”
Many environmental groups cheered the governor for allowing the bill to become law.
Josh Tulkin, executive director of Sierra Club’s Maryland chapter, called it “surprising and encouraging” that Hogan is supporting a 100% renewable energy goal, given that he has opposed similar measures in the past.
“This is the strongest bill ever passed in Maryland to fight global warming and now stands as a national example,” said Mike Tidwell, director of the Chesapeake Climate Action Network.
But others faulted the bill for not doing enough. The Clean Air Baltimore Coalition said on Twitter that the policy is “a general positive,” but it needs to be revised so that it doesn’t subsidize dirty energy sources.
Lawmakers had mixed responses to Hogan’s decision not to strike the bill down. In statements, Montgomery County Democrat Sen. Brian Feldman called the governor’s passive support for the policy “perplexing” given that he took no public position on it during the session; Eastern Shore Republican Sen. Stephen Hershey said he was “extremely disappointed” and predicted “noticeable and immediate rate shock for all electric customers.”
The 50% goal becomes law after two years of wrangling over how much renewable energy Maryland should commit to, and what should count as “green” energy. Proposals setting goals of 50% or 100% renewable energy were defeated in the General Assembly in 2017 and 2018.
This year’s top piece of renewable energy legislation was nearly defeated in March over concerns it threatened well-paying blue collar jobs.
When it was proposed initially, the measure removed trash incineration from a list of energy sources eligible for the green energy subsidy program. The owner of a Baltimore waste-to-energy plant, also facing increased scrutiny from Baltimore City Council for its emissions, said the money it receives through the program was essential to its operations.
The amount of subsidies paid to specific energy projects is not made public, but utilities such as Baltimore Gas and Electric paid them a total of $72 million through the program in 2017, the most recent year for which data is available. The money is paid through what are known as renewable energy credits — certificates that utilities must buy under the state renewable energy law, or else pay a penalty.
After behind-the-scenes arm twisting in Annapolis, the House of Delegates revived the bill in the final weeks of its lawmaking session last month, restoring the credits for trash incineration and paper making. It got final approval in the final hours of the session April 8.
Since then, environmentalists and the energy industry have been waiting, uncertain of whether Hogan might veto the legislation. The Republican governor vetoed a similar bill in 2016, which set the state’s current 25% renewable energy goal, but the Democrat-controlled General Assembly overrode his veto.
Some environmental advocates had said they hoped he would again issue a veto, arguing the legislation as written did not go far enough to reduce greenhouse gases and improve air quality.
Trash incinerators, also known as waste-to-energy plants, are considered green energy because their fuel would otherwise go to landfills, which produce methane that is even more detrimental to Earth’s greenhouse effect than carbon dioxide. The Wheelabrator Baltimore incinerator near Russell Street and Interstate 95 is the city’s largest single source of industrial air pollution, though it isn’t as polluting as all of the vehicles that drive past it.
And paper mills receive green energy subsidies because they are powered in part by burning a substance known as black liquor, a byproduct of the paper-making process that would be waste if it were not used as fuel.
For years, the owners and workers of the Luke Mill in Western Maryland fought proposals to make black liquor ineligible for the green energy subsidies. Black liquor is the third-largest renewable energy source receiving subsidies from Maryland utilities, after wind and hydroelectric power.
Paper mills across the eastern United States can continue to receive the money under the bill becoming law on Friday, but the Luke mill won’t be among them. Mill owner Verso Corp. is closing the Allegany County plant at the end of the month, eliminating 675 jobs. Verso cited declining demand for paper and increased competition from overseas as the reason for the shutdown.
In the renewable energy industry, the legislation could reverse a decline in solar power industry jobs tied to a decline in the value of renewable energy credits, which utilities buy on an open marketplace. As the supply of the credits has grown large enough for utilities to meet the state’s 25% renewable energy goal, the credits’ prices have plummeted.
Solar United Neighbors, a group that promotes solar energy co-ops, said a provision in the bill calling for 14.5 percent of the state’s energy to eventually come from solar projects in Maryland is the most aggressive requirement of its kind in the country. Lauren Barchi, the group’s Maryland program director, said it shows Maryland is “committed not just to the economic freedom of its residents, but to their energy freedom as well.”
Baltimore Sun reporter Pamela Wood contributed to this article.
For more information about ways you can shield yourself from the upcoming rate increase call Joe Tabeling of CQI Associates at 443-472-3870 or email joe@cqiassociates.com
