Less Supply And Greater Demand Will Always Equate To Higher Prices

“The truth is incontrovertible. Malice may attack it, ignorance may deride it, but in the end, there it is.”
- Winston Churchill

Who would have thought there would be such profound consequences from progressive policies regulating an industry that keeps the lights on for millions of people? It’s almost as if policymakers expected power plants to operate indefinitely without considering the impact of ambitious climate policies on our energy infrastructure. As Maryland faces the closure of crucial power plants, we are confronted with a looming crisis: the infrastructure needed to replace their energy output may not be ready until 2028 at the earliest.

The Brandon Shores and Wagner plants are pivotal to our energy grid, playing a key role in balancing supply and demand in the BGE, PEPCO, Dominion, PECO, APS, ME and PPL transmission zones. The decision to phase out many coal and natural gas plants, including these two, has led to a complex dilemma: how do we reconcile our climate goals with the immediate need for reliable energy?

Maryland’s push toward cleaner energy — specifically, the goal to source 50% of power from renewable sources by 2030 — has resulted in the retirement of numerous coal and natural gas power plants. This shift has led to rising transmission costs for Maryland ratepayers and will continue to do so until new generation capacity is developed. The situation is exacerbated by the planned or completed retirement of 14 power generation units and inadequate transmission infrastructure to bring in needed energy.

Susan Buehler from PJM Interconnection highlighted this issue, noting that while PJM has 38,000 megawatts of mostly renewable energy projects approved, developers claim that project delays are due to supply chain issues, financing difficulties, and local siting problems. While these factors are outside of PJM’s control, they underscore a critical issue: it remains challenging to bring new generation resources online swiftly, especially when new generation is urgently needed to replace the retiring resources.

In summary, PJM has approved 35 renewable energy projects in Maryland, which collectively promise to yield 38,000 megawatts of energy production; however, as of August 26, not a single project has come to fruition. These initiatives remain nothing more than theoretical concepts, penned on paper, awaiting construction. Despite Maryland's extensive incentives to bolster the renewable energy market, tangible results that address the rising energy demand continue to elude us.

I support any energy production methods that can safely help us confront this pressing challenge. Moreover, the Maryland General Assembly's effort to eliminate reliable energy sources is drastically compromising supply. This approach, while simultaneously advocating for total electrification and anticipating increased demand, is a recipe for soaring costs for Marylanders — a scenario that aptly illustrates the definition of insanity. It is frankly misguided to believe that we can defy fundamental principles of supply and demand to satisfy our appetite for renewables without imposing significant cost increases on consumers, which is both misleading and unjustifiable.

PJM spokesman Shields added that Maryland has the second-fewest projects in the queue among PJM states for the next few years. “We encourage Maryland policymakers to analyze why and what can be done to encourage development,” Shields said. “Maryland needs energy infrastructure — generation to produce power and transmission to move it to customers. The Maryland Office of People’s Counsel knows all of this to be true, and these critical issues deserve more than finger-pointing.”

Many have criticized PJM Interconnection for its historical shortcomings in transmission planning and its role in the current situation. However, focusing solely on PJM overlooks the core issue: Maryland's aggressive environmental laws. The climate legislation passed by the Democratic majority has accelerated the retirement of traditional power plants without simultaneously developing new generation capacity. This mismatch has left our energy infrastructure struggling to meet growing demands, further complicated by new data centers and increased electrification.

The ramifications of these developments reach far beyond the immediate vicinity of the plants themselves. Increasing transmission costs are impacting all Maryland ratepayers, placing a considerable financial burden on maintaining these facilities and upgrading our transmission infrastructure. This situation arises directly from the state's ambitious climate goals. As we phase out traditional power sources while simultaneously generating insufficient capacity from renewable resources, we find ourselves at a crossroads, resorting to some highly contentious solutions. Stakeholders, including PJM, suggest that substantial investments in the transmission network are essential to effectively manage the declining generation capacity.

In particular, to compensate for the energy previously produced by Brandon Shores and Wagner, proposals have emerged for new transmission lines to extend from the Peach Bottom nuclear plant in Pennsylvania. Additionally, the Piedmont Reliability Project has encountered substantial resistance from both public and private factions, largely due to concerns surrounding eminent domain, as well as environmental and health impacts. It is critical that these issues are thoroughly examined before any progress is made.

Once again, we find ourselves navigating a precarious and costly dilemma in Maryland, one that is self-inflicted by poorly conceived policies originating in Annapolis. This legislation, rather than fostering growth and prosperity, predictably burdens consumers with escalated and often crippling expenses.

Such financial strain not only affects individual households but also has broader implications for local businesses and the overall economy. It is imperative that we advocate for more thoughtful and strategic legislative decisions that prioritize the well-being of Maryland residents.

The Reliability Must-Run (RMR) agreement, which is pending approval, will temporarily keep Brandon Shores and Wagner plants operational from 2025 to 2028 to prevent power shortages and brownouts until new transmission infrastructure is completed. Yet, this stopgap solution highlights a broader issue: Maryland’s aggressive clean energy policies are escalating costs and will strain our energy system. The hefty investments for renewables and infrastructure upgrades reflect the immediate consequences of these ambitious goals.

Addressing Misconceptions About Environmental Impact

Despite concerns about the environmental impact, updated control systems have reduced emissions at these plants. The H.A. Wagner plant, which converted its last coal unit (Unit 3) to oil in late 2023, now operates primarily on oil and is used only under exceptional grid reliability conditions as managed by PJM Interconnection. It serves as a capacity resource, running only when necessary.

The Brandon Shores facility, which had two coal-fired units, was initially planned for conversion to oil. According to the Maryland Department of the Environment (MDE), Brandon Shores emissions will be equal or less than prior years since there is no change in fuel type. However, since PJM is also only calling these units into operation for RMR events and not for market needs, emission would probably be less than prior years.

Most people do not realize that the visible emissions from the stack are actually water vapor. Brandon Shores had installed wet scrubbers, an air pollution control system, that has cut sulfur dioxide emissions by 95% and these improvements, supported by Maryland’s Healthy Air Act, have greatly enhanced air quality. MDE has informed my office that emissions from the plant are expected to be the same as or lower than in previous years.

In 2016, the EPA designated Riviera Beach as a nonattainment area for sulfur dioxide (SO2), indicating that it did not meet national air quality standards. Consequently, MDE monitored SO2 levels from 2018 to 2021. By May 2022, the EPA approved the closure of the Riviera Beach SO2 monitoring site due to SO2 levels being well below 23% of the health-based limit.

MDE has indicated that continuing operations at these power plants is unlikely to significantly impact air quality, as Maryland's air is primarily affected by pollution from neighboring states and extremely hot weather conditions. Data from 2018 to 2021 showed SO2 levels consistently well below the safety limit of 75 parts per billion (ppb) for an hour, with an average of only 1.3 ppb. This demonstrates that emissions are well within safe limits. MDE also expects that operating these plants under the Reliability Must-Run (RMR) agreement will have only a minimal effect on air quality.

Legislative Efforts and Ongoing Challenges

Last session, I introduced House Bill 1315, the “Keep the Lights on Act,” which aimed to address energy reliability and the costs associated with power plant retirements. This legislation sought to protect Maryland constituents by ensuring that any changes to our energy landscape were based on comprehensive analysis and stakeholder input.

The push to source 50% of Maryland’s power from renewables by 2030 has resulted in the deactivation of many coal and natural gas plants, significantly reducing local generation capacity. This shift has driven up transmission system upgrade costs, which are now being passed on to ratepayers. The state's growing energy needs, particularly due to new data centers and the ongoing electrification of our infrastructure, further complicates the situation. Maryland’s climate laws, while important for long-term sustainability, have led to rising transmission costs and ongoing energy reliability issues.

Looking Ahead

BGE is hosting a community stakeholder meeting on October 1 at 6:00pm at Orchard Beach Volunteer Fire Department, located at 7549 Solley Road in Glen Burnie, to discuss the Brandon Shores Retirement Mitigation Project, which will be essential for neighboring communities to learn more about what will be happening in their backyard. Balancing the pursuit of clean energy with the immediate need for a reliable energy system requires a nuanced approach. The challenge lies in ensuring that our transition to a greener future does not compromise the stability and affordability of our current energy infrastructure.

In conclusion, the unintended consequences of overregulating Maryland's energy sector highlight a critical need for a balanced approach. While our climate goals are vital for a sustainable future, they must be pursued in tandem with practical solutions that address the immediate realities of maintaining a reliable and cost-effective energy system.