The Maryland Electricity Market: A Primer

Abstract

In 1999, Maryland chose to join several other coastal states in restructuring its electricity markets, in an effort to bring cheaper electricity into the state to supply heavy manufacturers who were considering relocating to places with cheaper supply. Initially, this policy change appeared successful as electricity rates fell for both households and businesses.

However, by the mid-2000s, electricity rates in Maryland and other "deregulated" markets were climbing heavily as a result of climbing national demand and rising generator fuel costs. The restructuring then became branded a failure.

This paper describes the history of he electricity market in Maryland (through 2009), noting the economic and political forces that shaped the market. It also critically examines proposals in the mid- to late 2000s to change that market, theorizing their possible effects.

Keywords: Maryland, electricity, restructuring, electricity deregulation

JEL Classification: D11, D12, D24, D49, L11, L94, N82