Maryland Energy Update

There have been a couple of recent development relating to energy supplies and prices in Maryland.

Jay Hancock blogs in the Baltimore Sun that SEMPRA Energy has pulled the plug on its proposed new power plant in Frederick County.  The natural gas-fired plant would have provided badly-needed capacity to Central Maryland and may have enabled the EastAlco plant to reopen.  The EastAlco aluminum smelter, now owned by Alcoa, was forced to shut down a couple of years ago when their long-term contract with Allegheny Power expired and they couldn't afford the high cost of electricity off the grid in Maryland.  SEMPRA apparently gave up because the pricing structure wasn't right.  Hancock seems to think there's a possibility the plant can be revived if a long-term contract with BG&E materializes.  I'm wondering if it may just be posturing by SEMPRA to get an exemption from emission caps like that suggested for the plant in Charles County. 

With this in mind, let's look at the other big basic metal production plant in Maryland - Sparrows Point.  Yesterday OAO Severstal completed its acquisition of the plant.  Severstal has said it wants to increase production at the plant and make significant investments in expanding and modernizing the plant.  Of course, a lot depends on energy costs - steelmaking is an energy-intensive business.  More directly, the manufacture of iron from iron ore releases lots of carbon dioxide into the atmosphere.  If Maryland's new cap and trade system increases the cost of iron-making, it may not be economical to continue basic smelting there.

Tom Pelton at the Sun's Bay and Environment blog has put up this post on greenhouse gas trading scams.  He writes about a letter that two EPA scientists have sent to Congress pointing out how cap and trade schemes are vulnerable to abuse and are difficult to enforce and verify.  Of course, Maryland is well on the way to implementing its own cap and trade scheme.  There's already talk of exempting favored companies - exactly what we don't need at this point.  As I've said before, a carbon tax fee would be a much more effective and transparent solution, but we seem to be committed to this other system.  We'll have to keep a close eye on implementation plan which still seems to be evolving.

There are some predictions that it will be a hotter than normal summer in the mid-Atlantic region.  It's going to be an expensive summer for energy.

[note: the photo shows tipple boys and drivers at a Maryland Coal Company mine in 1908]