Maryland’s PSC decides in favor of ‘rate-payer’ advocates against smart grids.
LESSONS LEARNED: Smart Grids’re Having A Hard Time Paying For Themselves Upfront…
BG&E Takes Its Smart Grid Case to Regulators – Staff, www.baltimoresun.com, 11 Nov 2009
Baltimore Gas & Electric (BG&E), armed with a $200 million Smart Grid Federal ARRA stimulus grant, took its case before the Maryland Public Service Commission (PSC).
The BG&E proposal combined smart meters with a new time-of-use price structure. BG&E also asked for authority to apply a surcharge on electric bills to help recover its project cost that includes replacing two million meters by 2014. The new pricing structure would increase per kilowatt-hour charges during times of peak demand during hot summer weather.
The PSC was asked to approve the pricing plan and the project cost recovery surcharges. The $200 million in federal stimulus cash will lower the surcharge and takes what “already was a strong business case and makes it stronger.”
Deployment of the smart meters is supposed to provide several benefits: real-time information for consumers so they can better control their energy use, automated meter reading, service disconnections and reconnections and outage detection—which could result in customer savings.
BG&E does have one problem: Consumer advocates don’t like it and they say so.
“We view it as too much too fast,” an advocate was quoted as saying in the Baltimore Sun. The speaker, Paula Carmody of the Office of the People’s Counsel, said advocates question if the project is the best, most cost-effective way to cut costs. The project is expected to cost roughly $800 million over the lifespan of the meters.
State regulators deny ‘smart grid’ proposal – L.F.Kay & H,Cho, www.baltimoresun.com, June 21, 2010,
A high-tech proposal promoted as a way to save utility customers billions of dollars and help them better control energy use was thrown into doubt Monday, after state regulators denied BGE’s request that rate-payers shoulder most of the upfront costs.
The Maryland Public Service Commission ordered that Baltimore Gas and Electric Co. should contribute some of the $835 million cost to deploy the “smart meter” technology.
“The proposal asks BGE’s ratepayers to take significant financial and technological risks and adapt to categorical changes in rate design, all in exchange for savings that are largely indirect, highly contingent and a long way off,” wrote members of the PSC in its order.
BGE President Kenneth DeFontes said he was “dumbfounded” by the PSC’s decision — and it’s not clear whether the utility will revise the application.
”At this point, it’s hard to see how we could pursue it with the constraints that the commission has put down,” he said.
BGE officials claim smart meter technology would allow two-way communication between customers and the utility. Consumers could track their electricity on an hourly basis. The utility would benefit from immediate information about outages and other system problems on the grid, automate meter readings, saving the utility money on meter readers.
The plan was estimated to cost a total of $835 million over the 15-year life of the meters, which BGE officials sought to recover through bill surcharges that the PSC had to approve. BGE received $200 million in federal ARRA stimulus grants through the U.S. Department of Energy, which would have decreased the cost of the initial five-year deployment.
The surcharge would start at 38 cents a month for electricity customers and an additional 44 cents for those who also use natural gas. Over the course of the 15-year program, it would rise to an average of $1.24 a month for electricity customers and an additional $1.52 for gas customers.
BGE officials have claimed that the company’s 1.2 million customers would save as much as $2.6 billion over the life of the meter.
The commissioners wrote that they understood the federal grants would help offset some of the costs that consumers would face. However, commissioners said that even a $200 million “discount” on an $835 million rate-payer investment cannot dictate the outcome here.
Representatives of the advocacy groups said they were pleased with the commission’s decision.
”I think it was a very difficult decision for the commission to make, but obviously, it was the right thing to do, given the amount of money that was at risk for consumers and the related impact on their lives through pricing schemes,” said Paula Carmody of the state Office of the People’s Counsel, which represents consumers who go before the PSC.
In their order, commissioners wrote that customers would begin paying a surcharge to cover the costs of the project long before they would reap any benefits from the new meters, which would have been installed through 2014. They also objected to approving a proposal that included mandatory “time-of-use” rates that charge residential customers higher electricity prices at peak times. Any future proposals should include an option for rate-payers to opt in or out of time-of-use metering, the commissioners wrote.
The majority of the estimated $2 billion in savings stems from consumers reducing their energy use during peak hours, according to the commission. But in their order, commissioners noted that BGE’s $835 million smart grid proposal would not provide its customers with the in-home displays and devices they would need in order to know how much energy they were using when. A BGE website would show data — but only from the previous day.