Rising utility bills are one of the biggest concerns of voters this year, and public sentiment against data ceters – huge users of electricity as well as water and land – has coalesced and swelled like no other issue.
But how did we get here? Electric utilities are expensive and complicated, and efforts to change policy and help consumers take years to take effect. The Maryland Now podcast team reached out to one of the most experienced figures to provide a clear and cohesive explanation. Michael Powell is an attorney with Gordon Feinblatt LLC and is considered one of Maryland’s leading experts in environmental and energy issues such as data center development, power plant permitting, climate change, and other energy and environmental issues. Earlier in his career he was Principal Counsel to the Maryland Department of the Environment. Here is what he had to say:
1. Supply is not keeping up with demand in Maryland
Powell calls this the heart of the problem. Maryland imports about 40% of its power from other states through the PJM grid, and plants have been retiring faster than new supply has come online. Costs are driven by peak capacity, meaning plants that sit idle most of the year but must be ready for the coldest night or hottest day. Data centers add demand, but he says they’re not the sole cause. Electric cars, heat pumps and ordinary device use all contribute.
“The heart of our problem is supply and demand,” Powerll says. “It’s just that simple.”
2. Renewables haven’t filled the gap
Solar is cheap but doesn’t help at peak times or on winter nights without expensive batteries. Local opposition has slowed solar farms and batteries, and the state’s first battery procurement drew only about three respondents, one of whom dropped out. Gas plants are unattractive investments under a policy aimed at eliminating fossil fuels by 2035. Brandon Shores, a coal-burning power plant near Glen Burnie is being kept open by federal order, and its planned replacement is a roughly $1.1 billion transmission line to Pennsylvania rather than new generation.
“We don’t want fossil fuel plants but we want the price of electricity to go down,” Powell says. “I don’t know how you do both of those quickly.”
3. Local opposition and short-term political thinking block new construction
Powell says short election cycles reward short-sightedness, and every project, from offshore wind to gas plants to batteries, meets “not in my backyard” resistance. If he could pick one fix, it would be the unpopular step of restricting people’s ability to object.
“We live in a world where nobody wants anything in their backyard… and everybody has a backyard,” Powell says.
4. Utility rates are rising faster than inflation
BGE and Pepco rates have outpaced inflation and some comparable utilities. Powell, who has opposed BGE rate cases for industrial clients, says return on equity is a legitimate question but less important than why costs are rising. BGE points to aging infrastructure and the demand-driven upgrades it requires.
“We have a shortage of power being generated in state, and so our answer is to spend a huge amount of money in importing additional power,” Powell says.
5. Data centers are a threat, but also an opportunity
Powell says they bring money for grid upgrades and generation. He pointed to “Bring Your Own Generation” deals, where developers pay up front, and to the tax base (Loudoun County: 3% of land, 46% of property taxes). He criticized the industry’s secrecy, and thinks today’s moratoriums and political one-upmanship are counterproductive.
“I think to blame data centers as being the sole cause of this is just factually incorrect,” Powell says.
Other issues covered in our podcast discussion include:
- Whether natural gas should be a “bridge fuel” while renewables catch up
- Why Maryland’s climate targets may be out of reach, and what the Climate Change Commission is weighing
- Mike’s one policy change, and a 10 year forecast for Maryland’s energy picture
Connect With the Show: Questions, comments, or story ideas marylandnow@blendedpublicaffairs.com
Maryland Now is brought to you by Blended Public Affairs and produced by Carper Cre8tive.
