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Exelon Corp., owner of three electric utilities in Maryland, recently announced it is seeking legislative approval to build power plants in the state, marking the first time a utility would do so in nearly 30 years. With electricity demand on the rise for the first time in nearly two decades, Exelon sees dollar signs and an opportunity to wind the clock back to the days of a full monopoly utility system that owns and operates all parts of the power grid: generation, transmission, and distribution.
Before Maryland adopted a competitive power market in the 1990s, monopoly utilities owned and operated all the power infrastructure, relying on state regulators to keep utility rates and expenditures balanced and verified.
Rightfully, Maryland ditched the monopoly model, opting instead to require its utilities to participate in a competitive market (PJM Interconnection) where different independent power producers compete to provide power at the lowest cost while reducing mandated fees that customers have to pay, regardless of energy usage.
Utilities like Exelon only want to build generation in the state if they can do so without competition, passing all of the risks onto ratepayers who pay for the resource and the utility’s profit. If Exelon wanted to build generation, it could start tomorrow, through a competitive affiliate in Maryland.
But utilities don’t want to compete or risk their own money. They apparently only want in on the generation game if they’re guaranteed a rate of return, removing all their risk and putting that risk squarely onto consumers’ backs.
Consumers will lose with that approach. Risk should not be borne by Maryland residents who are already struggling to pay household bills, including rising transmission and distribution costs levied by Exelon, but by investors and shareholders who are better able to bear that risk.
The PJM market, which had sent signals to retire assets, has reversed course over the past two years, and now is giving price signals to build new generation.
Just last week, the competitive power supplier Constellation announced that it plans to invest in up to 5,800 megawatts of electricity generation and battery storage projects in Maryland, enough to power over three million homes. To date, Constellation has invested over $1 billion of its own money to generate electricity in Maryland.
Even if utilities were allowed to build generation again, there’s no reason to believe that they could do it better, faster, or cheaper than IPPs. Utilities would face the same external barriers, including supply chain delays for critical infrastructure, lengthy permitting processes, and competition for qualified labor to build the facilities. Moreover, they’ve not built big projects like these in a long time.
Don’t take our word for it. Michael Hogan, a consultant with the Regulatory Assistance Project, explained in his testimony before Maryland regulators: “I fail to see how one could expect an organization that hasn’t built a new power plant of any kind in 25 years is going to do it faster and cheaper or have more success getting it through the interconnection queue than someone who does it all over the country, all over the world, every day.”
Not only are utilities unlikely to build generation cheaper or more quickly than IPPs, they’ve been raising prices for Maryland residents on the services they do provide for decades, without much benefit to show for it.
Between 2010 and 2025, transmission charges in PJM, the region’s grid operator, increased by 310%, and distribution charges in Maryland increased by 80%. Over that same time period, competition in PJM has reduced the cost of generation by 4%. According to a report from Energy Tariffs Experts, rising investments by local utilities in transmission and distribution are some of the biggest drivers behind recent electric bill increases in the region.
Despite utilities increasing the cost to deliver electricity, reliability metrics have remained essentially unchanged. Given the billions of dollars that utilities in Maryland have invested in grid updates, why have residents not seen improved reliability or better service to justify those costs?
Utilities come bearing gifts that might look inexpensive, but Marylanders will ultimately pay the price. Monopolistic behavior hurts consumers while competition drives innovation, lowers costs, and demands accountability. Competitive markets have a track record of constructing and delivering reliable power at the least cost to consumers.
It’s clear which approach is better for Maryland residents: continue to allow competitive markets to deliver results for the state.
Todd Snitchler is president and CEO of the Electric Power Supply Association, which represents competitive power suppliers that own and operate more than 200,000 MW of capacity throughout the U.S.