Maryland utilities issue RFPs for 4,462 MW power

LOS ANGELES, Sept 12 (Reuters) - Several utilities in Maryland have issued requests for proposals for a total of 4,462 megawatts of electricity to meet "standard offer service" obligations in the state, the companies said in a statement.

In Maryland's deregulation plan, standard offer service is the market-based, fixed-price power that the utilities buy on behalf of customers who do not choose a competing retail supplier and do not take the option of hourly priced service.

A lion's share -- about 85 percent to 90 percent -- of Maryland's customers have standard offer service rates.

The utilities are Baltimore Gas and Electric Co, a unit of utility giant Constellation Energy (CEG.N), Allegheny Power, Delmarva Power & Light, and Potomac Electric Power Co.

The RFPs are for terms as short as three months to as long as two years. Residential contracts will be purchased in two phases, in October 2007 and April 2008.

When Maryland deregulated its electricity market in 1999, it required utilities to sell their power plants and buy power from wholesale suppliers through competitive bidding. Residential electricity rates were capped for six years at 6.5 percent below 1993 levels.

When those caps were set to expire in the spring of 2006 and BGE was to charge market-based rates, BGE asked for a 72-percent increase. That caused an uproar and was a major issue in the campaign for governor, won by current Gov. Martin O'Malley.

In response, the state legislature in 2006 cut the increase to 15 percent but earlier this year BGE asked for a 47-percent increase, which state regulators granted on the basis that the utility followed requirements and the board did not have the rationale to reject the increase.

In July, O'Malley asked the state Public Service Commission to see whether the wholesale rates for electricity exceed federal standards for reasonableness, similar to what Illinois did in an action that led to a $1 billion rate rebate for customers.