Del. Impallaria: Energy - Deregulate or Regulate?

Annapolis Update - Energy - Deregulate or Reregulate? - Dec. 16, 2008

The final report to the Public Service Commission, “State Analysis and Survey on Restructuring and Reregulation (Task 2) and Analysis of Options for Maryland’s Energy Future (Task 3)” has been made. My committee, Economic Matters, has just received a briefing on it.

After listening to two hours of testimony by the Public Service Commission, I am still in full support of reregulation of the Maryland utility industry. The report showed that reregulation would be a good thing, starting three years after reregulation. This is supported by all the charts and statistics that were presented to us. In spite of this, unfortunately, the Commission feels that there are risks in reregulating.

One thing for sure, there has definitely been extreme risk in deregulation. The most recent risk is the devaluing of BGE and Constellation stock, which is proposed to be bought out by Warren Buffet at a fire sale price of $26 per share. Present stockholders would not be able to hold onto their stock until the value goes back up, which will happen immediately after the Buffet deal goes through. I feel it is in the best interests of BGE stockholders to reject the Buffet deal, if it is their intention to stick with a long-proven stock that will come back in value in the near future.

Under regulation, the management of Constellation Energy would not have been allowed to gamble with company assets in the commodities market, which caused the downfall in the stock values. Constellation’s value has not fallen due to a lack of customer base or an inability to produce a product. It has fallen strictly through the mismanagement of a deregulated management team — at the helm, Mayo Shattuck.

During the briefing, I asked three questions. First, if nuclear energy had been shown on the charts (which only showed gas, oil, and coal-fired energy), how would that change the outlook for energy reliability at a reasonable cost to Maryland consumers? The answer was, “Dramatically, it would increase the reliability of our future energy supply and provide a stable and predictable cost per kilowatt-hour, meaning lower cost.”

Second question: if the companies were reregulated, would the stockholders be forced to sell their stock? The answer to that was “No”, unlike the present deal which Warren Buffet is offering. Under regulation, a stockholder would be guaranteed a reasonable and fair return on their investment with little risk of losses.

Third, would jobs be more secure under a regulated or deregulated market, and which market would provide more jobs? I am waiting for an answer to that question from the Public Service Commission. It is obvious to me that BGE employees had more job security when the company was regulated than they have had since 1999, when deregulation took place.

On renewable energies such as wind and solar, the Commission did determine that wind offshore was not a productive means of energy and that wind on land is a break-even investment at best, while providing a very minor portion, less than 1% (one percent), of our energy needs. Solar costs more than it produces - in other words, it costs more to produce energy from solar than a company could charge for its product to make the business viable.

This study cost $3 million, and that cost will be passed on to the ratepayers in the State of Maryland. Having sat on the Economic Matters Committee and having been a member of the Public Utilities Subcommittee for six years, I can honestly tell you that I could have come up with the same conclusions for the cost of a notebook and a pen (and since my spelling is bad, an eraser) for a grand total of less tha $5.00.

There has been a major change in the ability to reregulate. As the cost of energy and the economy continue to plummet, so have the values of the power plants. A year ago the risk of purchasing these plants would have been like stepping off a cliff and hoping for a good result. Now at the devalued prices, the risk is more like stepping off a curb. If there was ever a time to take back control of these power companies and return them to the safe and valued companies they once were, now is the time. Taking control of these companies would protect the stockholders’ investment and prevent the irresponsible gambling with company funds that we have seen over the past nine years. Those funds could have beenused for better service, reinvestment in infrastructure and building new facilities with the goal of making Maryland an energy exporter rather than what we have become, an energy importer. That would be the best result for everyone involved, except for the few high-powered CEO’s
who have destroyed these once-great companies.

Delegate Rick Impallaria

19-Year-Old Pvt. Charles Barnett of Bel Air Killed In Iraq

According to the U.S. Department of Defense:

The Department of Defense announced today the death of a soldier who was supporting Operation Iraqi Freedom.

Pvt. Charles Yi Barnett, 19, of Bel Air, Maryland, died on Nov. 20 of injuries sustained from a non-combat related incident in Tallil, Iraq.

He was assigned to the 2nd Battalion, 12th Cavalry Regiment, 4th Brigade Combat Team, 1st Cavalry Division, Fort Hood, Texas.

The incident is under investigation.

In it’s latest casualty update, the Department of Defense indicates there have been more than 4,800 deaths in Operation Enduring Freedom and Operation Iraqi Freedom combined.

Will And All Us Dogs

With squatters on the East and squatters on the West, old Pilgrims north in Leeswood seem like old natives in this vastly different and rapidly changing world here at Rustica. The pup, Frisco, is doing fine, a little hardheaded, but a good dog. The feathery bantams, peafowl and Canada’s offer no playmates for this puppy that’s been here only six months. Continue reading Will And All Us Dogs

Buy Low, Sell High: How Low Can The Dow Go?

The adage is to buy low and sell high. Americans, and world denizens, have been buying high from the stock market for more than a decade. The stock market was driven up to historic highs, and generally peaked at a Dow Jones 14,903 on October 12, 2007, a year ago today (Sunday).

Over the past year the price of gold has hit historic highs, although it is down to $849 per ounce today. Investors have been selling diminishing stock values for increasing gold values. Continue reading Buy Low, Sell High: How Low Can The Dow Go?

Burning Down the House: What Caused Our Economic Crisis?

The government has now approved a record $700 billion plan to try to stabilize US–and world–financial markets. The plan is not a total bailout as the media describes it; it is more of a government purchase of the stock of failing companies. The government is expecting a return on it’s investment, and, who knows, perhaps Uncle Sam will actually make money on this “deal.”

Of course, the government is doing the negotiating, so instead of using leverage to buy anything worthwhile, such as the senior preferred stock that Warren Buffet gets when he takes over a company (senior preferred stock gets paid first when dividends are awarded) the feds are getting non-voting stock. There is also no mandate that the stock be bought back, which means that a portion of the $700 billion will go to lobbyists maneuvering to have the stock perpetually “floating” so that it’s never actually repaid. Continue reading Burning Down the House: What Caused Our Economic Crisis?

Silver Star And A Touchdown Or Two…

When Sam Sheetz was wounded pulling fellow infantrymen out of hostile fire in Vietnam he didn’t think of the homeruns he’d hit playing baseball as a youngster….or the touchdowns he scored playing halfback for Bel Air High School in the early ‘60’s….all the thoughts of homeruns or touchdowns were just as much a dream as the nightmare he was in right at that moment…. Continue reading Silver Star And A Touchdown Or Two…

Different Hair And Waist Lines, But Still Smiling 20 Years After High School Graduation

By Dell

I find myself on the eve of my 20 year high school reunion, staring at a beautifully composed and formatted invitation and memory book questionnaire, looking back and wondering, “Where did the time go?”

More importantly, I guess, where did that 18-year-old kid in all these pictures run off to? The kid with all the hair (many follicular scholars have opined that I was sporting a mullet in 1988. While I admit that I had some locally based commerce occurring in the front, and an informal gathering of acquaintances in the back, it was by no stretch of the imagination a mullet as defined, but I digress), the “devil may care” attitude, and the 32 inch waist. Where’d he go? Continue reading Different Hair And Waist Lines, But Still Smiling 20 Years After High School Graduation

Never Discuss Politics Or Religion

My daddy always told me just that…and to ‘never, ever lie, cheat or steal’. With that thought in mind and the upcoming Presidential election looming in November it brought to mind my take on the whole deal.

First of all, I do not watch television in the morning or before noon or after noon…unless it’s the U.S. Open or weather. That’s a fact Jack. Continue reading Never Discuss Politics Or Religion

The Dagger Debate 2008: Now We Know The Candidates - Tell Us What You Think

McCain/Palin vs. Obama/Biden

While the announcement by Senator John McCain introducing Governor Sarah Palin as his running mate puts to rest the speculation of the selection, it sure opens up a new battleground full of interesting scenarios. We are asking readers of The Dagger to share their opinions, in a civil manner of course, on the following questions, as well as on all the other issues facing the candidates. Continue reading The Dagger Debate 2008: Now We Know The Candidates - Tell Us What You Think

Seemed So Much Simpler Then…

My Mom used to cut chicken, chop eggs and spread mayo on the same cutting board with the same knife and no bleach, but we didn’t seem to get food poisoning.

My Mom used to defrost hamburger on the counter AND I used to eat it raw sometimes too, but I can’t remember getting E-coli.

Almost all of us would have rather gone swimming in the lake instead of a pristine pool (talk about boring), the term cell phone would have conjured up a phone in a jail cell, and a pager was the school PA system. Continue reading Seemed So Much Simpler Then…

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