BGE plans to launch a pilot program to test new meter technology as part of a broader energy management strategy that will include conservation. The initiative comes in the wake of a 72 percent rate increase that resulted in part from rising wholesale energy prices.
"We are looking at ways to better help our customers manage energy costs and usage, and there are various programs out there to do that," said Linda Foy, a spokeswoman for BGE.
The company said the scope and details of the program are being worked out, but it is expected to touch all 1.1 million of its customers. Pepco has proposed a similar pilot program in Washington, where it hopes to outfit the homes of 2,250 customers with smart meters. The plan is awaiting regulatory approval.
FOR THE RECORD - An Page A1 article Sunday "smart meter" technology incorrectly stated that Baltimore Gas and Electric employs contractors to read electric meters in its territory. The meters are read by BGE employees.
The Sun regrets the errors.
Experts say lowering demand even a few percent or less at critical times means some power producers don't have to turn on their most expensive natural gas and oil generators to meet demand. Such "peaking" plants often operate fewer than 100 hours a year but can have a disproportionate effect on the wholesale price of electricity.
However, critics note that shifting power usage to different times of day will not reduce - and might even enhance - the need for baseload coal and nuclear plants, which come with environmental costs.
"Before any utility spends billions on massive new metering technology, they ought to be spending that money on energy-efficiency programs," said Martin Kushler, director of utility programs for the American Council for an Energy-Efficient Economy.
If a customer puts off washing dishes until 10 p.m., he is still using the same amount of electricity as he would if he did dishes during the day, Kushler said.
But proponents counter that customers who turn down their air conditioner or pool pump for a few hours during the hottest part of the day are using less energy even if they turn it back on at night, when it's cooler. In addition, smart meters force consumers to pay more attention to how and when they use energy. Once they see the potential for savings, many consumers find ways to use less, some argue.
Smart meters offer other benefits, such as making it possible for utilities to automatically tell which customers are without power instead of having to knock on doors or wait for them to report a problem. Such information shortens the time it takes to make repairs.
The meters also can be linked with other devices, such as "smart" thermostats, which come equipped with displays that, among other things, can be programmed to tell a homeowner how much energy he is using and at what price. In exchange for rebates, customers could allow their utility to remotely raise the setting on their thermostats on a few hot days each year.
Over the long term, other devices could be added that remotely control individual appliances, telling them to temporarily shut down during times of high energy demand. Industry officials envision a day when many new appliances will be equipped with standardized computer chips allowing them to be controlled remotely, with smart meters acting as a sort of control hub. Such devices are a step beyond older radio-frequency technology that BGE and others have been using for years to remotely control customers' air conditioners and water heaters.
"What it's doing is really introducing a lot of intelligence to the system," said Victor Richey, chief executive officer of ESCO Technologies Inc., whose DCSI subsidiary produces the smart meters that Pacific Gas is fielding in California.
Pacific Gas has the largest smart-meter program in the U.S., in part a result of that state's continuing efforts to manage power usage after a costly energy crisis that resulted in rolling blackouts five years ago. The utility says its pilot studies show that the meters induce consumers to shift some power usage to off-peak hours. Larger efforts have been undertaken in Europe. Enel SpA of Italy outfitted 27 million customers with the devices.
Utilities in the U.S. have historically been slow to adopt demand response and conservation initiatives because in most states the utilities' profits are linked to how much electricity they sell. State regulators estimate that a 1 percent decline in energy use can cut profits for a distribution utility - such as BGE - by as much as 5 percent to 10 percent.
But Maryland and a growing number of other states are moving to "decouple," or sever, the relationship between profits and electricity sales, allowing utilities to earn a consistent rate of return even if customers use less electricity. Pepco and Delmarva Power have included a decoupling proposal as part of rate cases they recently filed with the state Public Service Commission. BGE's gas rates already function that way, and the electric side of the business is expected to follow suit the next time the utility goes before the commission for a rate case.
The move toward smart meters won't come cheap, which might worry Maryland consumers hit with recent rate increases. Pacific Gas customers, for example, will see a temporary rate increase of 1 percent with the installation of smart meters. But the savings generated will more than pay for the meters, said Paul Moreno, a spokesman for the San Francisco-based utility. Many industry experts and consultants say the meters generally pay for themselves in five to seven years.
"It's a modest cost now for a big benefit over the longer term," Prindle, the energy efficiency group's deputy director, said of demand response and conservation programs. "If we don't smarten up the grid, we're going to just wind up with a Third World electric system eventually."