Baltimore Gas and Electric Co. has reached an agreement with major electricity users, environmental groups and consumer representatives that could add an estimated 42 cents to the monthly bill of an average residential customer to help pay for the company's conservation program.
BG&E plans to submit a proposal in mid-July for the rate increase, which could become effective during the summer, BG&E spokeswoman Peggy Mulloy said.
The extra fee would pay for such things as rebates to customers who buy energy-efficient equipment and compensation to the utility for business lost because of its conservation efforts. In effect, the company would receive money for not generating electricity.
Supporters of the plan, including BG&E and a consumer representative, say the program would help the environment by eliminating the need for another power plant. They say consumers could actually cut their utility bills, despite the higher rates, if they take advantage of the program.
"The object of the program is to provide service, not megawatts," said People's Counsel John M. Glynn, the state official who represents residential ratepayers. "If you can cool your house for $100 a month, do you care how many kilowatts it takes?"
BG&E estimates that the average customer using 600 kilowatts a month would pay an additional 42 cents under the new rates. That would increase to an estimated $1.38 a month by 1997, when the program is fully phased in, said Sheldon Switzer, BG&E's main negotiator for the proposal.
Initially, about 40 percent of the charge, about 17 cents, would go to compensate the utility for revenues lost because of conservation efforts. That would drop to 20 percent by 1997.
The outlines of the cost-recovery plan have been agreed to in principle by a group set up last May to develop BG&E's conservation plans.
The group includes the staff of the Public Service Commission, the People's Counsel, the Maryland Department of Natural Resources, the Maryland Industrial Group, the Building Owners and Managers Association of Metropolitan Baltimore Inc., Bethlehem Steel Corp. and the Sierra Club.
Other states, including Vermont, Massachusetts, Oregon, Washington and Indiana, have adopted similar programs, said John J. Plunkett, senior vice president of Resource Insight Inc., an energy consulting company in Boston.
The key to the program is BG&E's financial incentives for customers to switch to more efficient electrical equipment. This program, called Conserve 2000, has been operating for about a year. Its goal is to reduce consumption of electricity by 1,000 megawatts -- more than the output of one reactor at the Calvert Cliffs nuclear power plant -- by 2000, said Bruce D. Dawson, director of conservation and energy management for BG&E.
As part of the effort, BG&E signed an agreement yesterday to give the University of Maryland Medical System a rebate of $536,000 for installing a new thermal storage unit for the planned Homer Gudersky inpatient building. The rebate is the largest awarded by BG&E under the program.
The company also announced that it is giving Maryland National Bank a rebate of $73,200 for a new natural gas air-conditioning system at its computer center at 225 N. Calvert St. About 300 BG&E customers have received rebates for installing more efficient heating and cooling systems since the program began in February, Mr. Dawson said. The average rebate has been about $350, he said.
BG&E plans to spend about $25 million this year on conservation efforts, Mr. Dawson said. The rebate program will be expanded to include other conservation efforts, such as housing insulation, he said.
Perhaps the most controversial element of the program is increasing rates to replace the revenue that the utility will lose as the result of conservation. But Mr. Glynn said he doubts the conservation efforts would work without that incentive.
"Asking a utility to conserve is like asking General Motors to promote the use of bicycles," Mr. Glynn said. The program is "based on the premise that people are not going to do things that are emphatically and demonstratively not in their best interest."
Consumers will come out ahead if they adopt the more efficient electrical equipment and lower their overall consumption, Mr. Glynn said. There will also be a benefit to the environment. He said it was impossible to overestimate the severe impact that electricity production has on the environment.
The PSC has already approved such a cost-recovery plan for Potomac Electric Power Co., which supplies electricity to Washington and parts of Montgomery County and Prince George's County. Under that plan, 10 cents was added to the average monthly bill Oct. 1. That increased to 26 cents Jan. 1, after the company started other conservation programs, said E. R. Mayberry, manager of market planning and policy for Pepco.