Maryland’s Restructured Power Industry

Traditionally, the local electric utility operated as a franchised monopoly, supplying end-use customers with the three main parts of electric service: generation, transmission, and distribution. In 1999, legislation restructured the state’s electric utility industry, allowing retail customers to shop for generation service among various electricity suppliers. For a number of years, restructuring also reduced and then fixed the incumbent utilities’ generation prices offered to retail customers. Now, the last of the utility price caps are set to expire.

Maryland’s traditional local electric utilities have transferred their electric generation assets to unregulated subsidiaries or have sold these assets to unaffiliated companies. Consequently, the electricity generated in Maryland is no longer subject to price regulation, as it has been under the traditional regulatory framework. Power plants continue to be subject to applicable environmental, socioeconomic, and land use requirements (e.g., permits).

Companies generating electricity, as well as marketers and brokers, can sell directly to end-use customers. However, the delivery of power (the “wires” component) continues to be the responsibility of the distribution utilities. The distribution of electricity will continue to be a regulated monopoly function, and hence will continue to be subject to price regulation by the Maryland Public Service Commission (PSC). High-voltage bulk electric transmission is regulated by the Federal Energy Regulatory Commission (FERC). The transmission grid is the interconnected network of high-voltage transmission lines, substations, and other electrical equipment. PJM Interconnection is a regional transmission organization (RTO) that oversees the transmission grid and operates the centrally dispatched, wholesale electricity market spanning Maryland and all or parts of 12 other states and Washington, D.C.

For additional information on electric choice, contact the Maryland PSC’s Answer Center at 1-800-800-4491 or go to the Web site: www.md-electric-info.com/.

Restructured Electricity Market

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