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Energy Administration powering up for Md.’s future

By Andy Rosen, Daily Record Business Writer
Published on March 21st, 2008
MPPI IN THE NEWS

ANNAPOLIS - Maryland has to be more conscious about the way it steers itself into a complicated energy future, says Malcolm D. Woolf. And the director of the Maryland Energy Administration has been thinking about exactly how to do that.

Woolf, who took the helm at the agency last summer, is presiding over a change in direction for the MEA. The goal, he said, is to look more broadly at Maryland's energy system.

"MEA traditionally administered narrow energy-efficiency and renewable-energy programs," said Woolf. "What I think Maryland has found is there has not been an entity that was looking out for the overall energy picture."

Woolf says the MEA can make Maryland a less passive player in the energy market. The state needs a better plan for how to make sure electric supply matches up with demand, and a key component of that plan is a substantial reduction in the amounts of power that Maryland uses. MEA is the agency to oversee that process, he said.

Gov. Martin O'Malley supports these goals as he continues to make environmental and energy issues a centerpiece of his administration. For fiscal 2009, he increased the MEA's budget by 11 percent, boosting programs and adding staff at a time when Maryland is looking for budget savings wherever it can find them.

O'Malley is trying to increase the state's ability to plan, since Maryland's ability to direct the power industry was weakened by a 1999 decision to deregulate and rely more heavily on market forces. Unlike many other states, Maryland does not have a cabinet-level office to develop energy policy. With Maryland facing supply shortages as soon as 2011, Woolf believes now is the time to get moving on the state's power challenges.

But often during this year's budget process, Woolf has found himself on the defensive before lawmakers, seeking to protect O'Malley's budget increases.

One prominent example is the proposed addition of seven new positions at the MEA. They are intended to plan for energy needs in Maryland, to evaluate the safety of the power system and its security against threats from terrorism and natural disasters, and to help bring more generating capacity to the power-strained state.

It appears that between three and five of those positions are in doubt. The House and the Senate both have voted to make cuts in the agency's budget despite Woolf's claims that he needs the new workers to move forward. The differences will have to be worked out in negotiations between the two chambers.

Many in the General Assembly say they're not opposed to the growing role of the Maryland Energy Administration. Their reservations, it seems, are all about the money.

This is a tough time for the state to add new positions, said Sen. James E. DeGrange Sr., D-Anne Arundel. He heads the Senate Budget and Taxation Public Safety, Transportation and Environment Subcommittee, which voted to cut five of the seven new positions. The move is expected to save about $250,000 in 2009.

Every bit of belt-tightening counts, because the state's revenue picture is looking increasingly bleak. The state Board of Revenue Estimates projected early this month that Maryland would get $74.7 million less than it expected during fiscal 2008, which ends in July, and $258.2 million less than it had anticipated for fiscal 2009.

Still, DeGrange said he'd be open to finding ways to get the MEA its new positions. One way to do that might involve shifting jobs from other state agencies.

Del. Murray D. Levy, D-Charles, is vice chairman of the House Appropriations Transportation and the Environment Subcommittee. That subcommittee has cut three of the MEA's new positions, a reduction of about $150,000.

He said it's "penny-wise and pound-foolish" not to give the MEA the resources it needs. Reduced strain on the state's power system will only save money in the long run, he said, even if it costs a little more now.

"When you have to cut the overall budget, that doesn't mean you cut every budget," he said. "We have a multibillion dollar problem with energy."

Regardless of how many new positions the MEA gets this year, it is in a much different position than it was in 2007.

"There was conversation about cutting it completely out of the budget last year," Del. Tawanna P. Gaines, D-Prince George's, who heads the transportation and environment subcommittee, said of the MEA. "We've changed our minds since then."

She said the MEA's mission was not clear before and some legislators were unsure about its role. Gaines said Woolf has helped to change her mind since he's been in office, distinguishing the MEA's role from other state agencies involved in the energy system.

Before he came to the MEA, Woolf, 40, directed the National Governors Association's committee on natural resources, where he met Gov. O'Malley.

A lawyer, Woolf has also worked for the U.S. Senate Environment and Public Works Committee and the Environmental Protection Agency. He began his career in private practice, working on energy issues for both Winston & Strawn LLP and Piper & Marbury LLP - now a part of DLA Piper U.S.

Maryland has a complicated role in energy markets.

The Public Service Commission, a quasi-judicial regulatory panel, has broad power over licensing and regulation. It has often advised the General Assembly on steps to reform the power market. The Office of the People's Counsel advocates for residential ratepayers before the PSC and other regulators.

The Department of Natural Resources has a power plant research project to evaluate proposed generators in the state and their effect on the environment.

Woolf distinguishes the MEA from other state agencies by saying it takes a more aggressive role in energy markets, helping to spur activity rather than waiting for proposals.

For example, if a company wants to build a power plant in the state, the PSC and DNR determine whether such a plant would comply with state laws and regulations.

Woolf said a stronger MEA could determine if the state needs the plant. The PSC used to have a stronger role in energy planning before power generation was deregulated in 1999. Now, state policy largely depends on markets to help bring power plants into the state.

According to Woolf, Maryland has lacked strong energy planning since deregulation, when the state gave up much of its regulatory control over the market for electric supply. Before 1999, the PSC could order utilities to find ways to build new power plants. In recent years, Maryland hasn't done enough to plan ahead, he said.

"We wouldn't have been surprised when the rate caps came off," he said, referring to the 72 percent price increases for many customers of Baltimore Gas & Electric after deregulation. "We knew that was going to happen in 1999."

The idea that the state should take a more active role in planning for power markets doesn't resonate with everyone, though.

Christopher Summers, president of the conservative Maryland Public Policy Institute, said history is "littered with examples" of how state planning has failed. He said spending more money is not going to help.

"Whether you add the jobs or not, it does nothing to change things," he said. "More regulation is not going to change things."