MARCH 3, 2009
 
 
My name is Tony Clifford; and I am President and CEO of Standard Solar, Inc, headquartered in Gaithersburg, MD.
 
Standard Solar is a full service, turnkey solar system developer and integrator. To date, we have installed some of the largest photovoltaic systems in the state of Maryland as well as hundreds of residential systems. In June 2006 we started commercial operations with one employee. Now we have approximately sixty employees. All of our employees have "green jobs" working out of our headquarters facility in Gaithersburg. In 2008 we raised $11 million of additional investment capital. Since we raised that $11 million prior to any of the recent solar-friendly changes at the federal level, I can honestly say that the pro-solar statutes passed by the Maryland legislature in the past two sessions are the primary reason we were able to secure this substantial investment. Now I only hope that you as legislators do not pass any legislation that would destroy the industries being created by Maryland's pro-solar initiatives. 
 
Today I am submitting this testimony in opposition to Senate Bill 795 -- Maryland Electricity Re-regulation and Energy Independence Act of 2009, and Senate Bill 844 -- Public Service Commission -- New Electric Generation Facilities -- Rate Regulation and Contracts.
 
 
This bill is bad for renewable industries in Maryland
 
At a time when the federal government is poised to spend billions to promote renewable energy, this bill would essentially make the Maryland wind and solar industries hostage to the electric utility industry. To date I would characterize the electric utility industry as largely in opposition to the widespread implementation of renewable technologies. Regulated utilities tend to favor large, centralized facilities with high capital costs as opposed to the smaller, decentralized, less capital-intensive solar projects. This ingrained opposition to decentralized technologies is not going to change overnight or even in the next several years. Putting the fox in charge of the hen house is not the way that new industries are typically developed. Remember, it was not IBM that developed the personal computer. It was an upstart called Apple. Telecommunications companies did not develop the Internet. It was an upstart called
 
 
America-on-Line (AOL). Another upstart, Microsoft, bought an operating system from IBM modified it a bit and -- you all know the rest of that story. My point here is that utilities are not going to develop the renewable energy industries. Tying the future of the solar and wind industries in Maryland to the electric utilities is effectively killing the growth prospects for these now vibrant and potentially very important industries in the state. I do not think this is what the Maryland legislators had in mind when they passed several pro-solar pieces of legislation in the past two sessions. It is certainly not what their constituents were looking for either.
 
 
Negative Impact on Financing for Solar Energy Systems
 
Under the Solar Renewable Portfolio Standard legislation previously passed by the Maryland legislature, energy companies are required to purchase Solar Renewable Energy Credits (SRECs). These SRECs are a key component in the financing of solar electric systems. To date, utilities have not been leaders in the financing of solar electric systems. It has been the alternative energy suppliers who have taken the lead.  Passage of this bill could put the entire SREC market in jeopardy which would effectively halt the financing of solar electric systems in the state.
 
 
Will Re-regulation in Maryland Have an Impact on Electricity Prices?
 
The costs of fuels currently used to generate electricity are determined by global supply and demand constraints. The huge ramp-up in commodity prices for oil, coal and natural gas in the past several years has been the primary cause for the rapid rise in the cost of electricity, just as the recent drop in commodity prices as a result of the worldwide recession is currently causing downward pressures on electricity costs. These economic facts would not be any different if Maryland had never chosen to deregulate. Likewise, the will be the same in the future whether or not Maryland chooses to re-regulate. Moreover, with national green house gas and/or carbon legislation a likely prospect, utilities may well be required to make new technology investments to sequester or otherwise minimize carbon. These additional costs will need to be borne regardless of whether or not the electric utility industry is re-regulated.
 
 
Is Monopoly or Competition the Right Approach?
 
Throughout our economic history monopolies have never been demonstrated to be the preferred economic vehicle for delivering lower prices or bringing new technology solutions to the marketplace. It wasn't the whale oil industry that brought petroleum to market in the 1860s and locomotive manufacturers did not work on the development of the automobile. I sincerely doubt that electric utilities will be in the forefront of the movement to develop the electric car even though electric vehicles can be viewed as a way to store electricity for use during periods of high demand. Likewise distributed photovoltaic systems have long been recognized as an effective means of reducing peak power demand. Sadly the electric utilities' typical response to increases in peak demand have been to cite the need for more centralized power stations and new high tension transmission lines to bring in additional power to meet growing peak demand.
 
 
Are the benefits of re-regulation real?
 
At Standard Solar we have had the opportunity to speak with numerous commercial, industrial, education and government electricity customers in the state of Maryland. Right now a substantial majority of those we have met with are not purchasing their power directly from Pepco, BGE or another utility. Rather these companies are purchasing their electricity from a third-party provider of electric power. Electricity is a commodity and there is only one reason not to purchase directly from the utility -- a lower price! It is competition that is holding down the cost of electricity for these customers. In an era of re-regulation where is the competitive pressure going to come from to hold prices down? Nowhere -- and the cost of electricity will inevitably rise more quickly than it will in an otherwise competitive market.
 
In addition to cost, another source of major angst among Marylanders is the widely publicized possibility or rolling brownouts and blackouts in electrical supply that could begin to occur as early as 2011 0r 2012. Utilities are arguing that they can only minimize the possibility of such blackouts and brownouts if Marylanders shoulder the cost of new central stations and new transmission lines built within the state. However, the brownouts and blackouts that have occurred in the past few decades have impacted areas of the nation well beyond the boundaries of Maryland or any other individual state. Blackouts and brownouts are regional or even national problems. Re-regulation of utilities in Maryland is not going to measurably reduce the potential for such problems in our state. Moreover, the aging infrastructure of our electrical grid is a national problem. These problems must be dealt with on the scale at which they occur -- regionally and nationally.
 
 
In closing I urge the legislature to seriously reflect on the root causes of our current problems and not try to bring back the good old days of regulated utilities. They weren't very good anyway, and their return won't solve the current problems of electricity cost and supply. 
 
I thank you for allowing me to share my thoughts on SB 795 and SB 844 and I urge the committee to give these bills unfavorable reports.
 
 
Anthony E. Clifford
President & CEO
Standard Solar, Inc.
202 Perry Parkway
Gaithersburg, MD 20877
Office:  301-944-5146
Email: tony.clifford@standardsolar.com 
www.standardsolar.com

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