Renewable energy taxes would target electric bills

(Feb. 25, 2011) Three bills in the Maryland General Assembly would create penalties for high electricity costs in businesses or homes — unless the electricity came from green-friendly solar or wind power.

But either way, the cost of electricity to consumers would be more, much more in some instances.

As part of a push to encourage development of offshore wind power, the bills would add taxes on high electricity users who buy from power companies that generate electricity by conventional means.

The revenue from those taxes would be placed in a Maryland Renewable Energy Fund to invest in green energy.

If passed this legislative session, businesses wouldn’t have to comply this year, but a town such as Ocean City that caters to crowds of tourists for hours on end would notice the pinch.

“Gas and electric are two of our biggest costs since we have all the kitchen equipment running all the time,” said Alex Rivkind, a delivery driver at Fat Daddy’s sub sandwich restaurant. “Especially during the summer when we only shut it down for a few hours at a time before opening early.”

Maryland Retailers Association President Patrick Donohoe said charges trying to regulate electricity use would put a burden on small businesses such as grocery stores, which have to keep machines such as freezers running all day long.

“If they needed to upgrade freezers, they might be under funded anyway and might not be able to dig out of that hole,” Donohoe said. “Everybody is trying to lower their energy costs and under current state law utilities already have to meet a target for renewable energy. So I’m not sure creating a fund would move energy markets in a sustainable way.”

The plan to create costs for high electricity use to retailers is laid out in House Bill 662 and in Senate Bill 648. The cost estimates in the Senate version were still being amended this week but the House bill targets businesses that use 25 percent more than the average power consumed by businesses based on the rate class assigned to them by the state Public Services Administration.

Another strategy to raise renewable energy funds and reward earth-friendly electricity use is Senate Bill 304, which would apply charges on high electrical use to homes that don’t use renewable electricity. The monthly fee would come to 1.3 cents per kilowatt-hour for all electricity generated after the 1,000 kilowatt-hour mark.

To avoid these charges owners of businesses or homes would have to switch to wind power, which Sen. Paul Pinsky (D- 22) said could cost an extra $1.40 to $1.70 per monthly housing bill in the near future. If the bill passed, Pinsky said costs would vary based on bids made by companies to deliver green energy to consumers.

“In the early years it would cost more but if coal electric costs go higher than $1.60 per month then it might become a savings to people,” he said. “If we start making changes now when the economy is in a downturn we might be able to grow that green economy that we need.”

Much of the power in Greater Ocean City and Worcester County is delivered by Delmarva Power, which chooses its supplier based on the best price rather than the type of fuel source. Matthew Likovich, spokesman for Delmarva Power is “still analyzing” the affect these bills would have on its consumers and is evaluating what changes might need to be made.

“The amount of money raised by the surcharge could be quite substantial depending on that rating assigned to businesses,” said Likovich. “Also our 2010 data shows that about 41 percent of our approximately 170,000 Maryland residential customers had energy usage over 1,000 kilowatt-hours per month and would be affected.”

Putting a charge on houses rather than businesses is a more economical proposal likely to pass the General Assembly, said Gary Skulnik, president of Clean Currents green energy delivery company.

“Prices for everyone to buy energy are going down, so if there was ever a time to start funding more renewable energy in this way it would be now,” he said. “But if you start getting commercial involved, then it could affect small business owners who are trying to save every cent in this tough economy.”