'Smart Grid' Technology Makes Sense For Consumers

July 20, 2009|By Kenneth W. DeFontes

Last summer, Shirley Norlem of Annapolis joined 1,000 other Baltimore Gas and Electric Co. customers in testing new "smart grid" technology that promises to transform the way Marylanders consume - and conserve - energy in our increasingly carbon-constrained world.

In exchange for significant rebates on her bill, Ms. Norlem shut down her plasma television, computer and other household electronics on the hottest summer afternoons. The efforts of Ms. Norlem and other participants in the pilot program helped reduce strain on the electric grid, lessening the need for BGE to draw additional power during times of peak demand, when electricity in the wholesale market is most expensive.

After the peak demand period ended at 7 p.m., Ms. Norlem resumed her normal activities. She described the inconvenience of postponing things like doing dishes and laundry as "no big deal." But the savings were. She earned $183 in rebates over the course of the summer.

In all, 93 percent of the participants in our smart grid trials said they were highly satisfied with the program and would sign up again if given the chance. For the first time, they had the tools and clear financial incentives to manage their energy consumption and costs. Participants reduced their peak energy usage by 22 percent to 37 percent and earned more than $100 in rebates.

That's real savings at a time when the financial sting of rising global demand for natural gas, coal and other fuels used to produce electricity is still fresh in the minds of consumers. Though the recession has caused electricity prices to dip recently, long-term trends suggest the return of normal economic growth will again put upward pressure on electricity prices. No one likes these higher costs. They hurt our economy and contribute to rising greenhouse gas emissions and global warming.

That's why BGE wants to empower a million Shirley Norlems. This week we unveiled a comprehensive smart grid program designed for all of our customers, creating one of the most ambitious programs of its kind in the nation. This effort has the potential to reduce the need to build costly power plants, to cut greenhouse gas emissions and to save our customers an estimated $2.6 billion over the life of the program.

The backbone of this initiative is a proposal to install new, advanced "smart" meters in the homes of every customer, establishing a two-way digital communications network that will allow us to record a customer's energy usage on an hourly basis. This capability will pave the way for a menu of new energy pricing and efficiency measures that will empower customers to take control of their energy use. In the future, smart meters will communicate wirelessly with a smart thermostat, appliances and other devices, providing customers with even greater real-time understanding and control of their energy use.

All combined, we estimate that by 2015 our smart grid initiatives will reduce peak energy demand by 1,700 megawatts - the equivalent output of a large nuclear plant. Combined with proposals to build a new nuclear unit at Calvert Cliffs, this reduction could significantly decrease the need for Maryland to import power from neighboring states. The significant savings generated will flow back to customers.

This effort will cost money initially - about $1.24 a month for a typical residential electric customer. But we estimate the cost for new smart meters will be small stacked up against the $2.6 billion in expected savings. Ultimately, it has the potential to make Maryland more competitive and a model for other states to follow. Further, we believe it is essential to meeting Gov. Martin O'Malley's goal of reducing Maryland's per-capita energy consumption 15 percent by 2015.

It is precisely this kind of investment that President Barack Obama had in mind when he called for the creation of a more intelligent energy system with the goal of increasing the competitiveness of our economy and protecting the environment. That's why we have applied for a $200 million grant from the federal stimulus package to help defray the cost. That's potentially more stimulus money flowing into Maryland at a time of great economic need.

Ultimately, we can't insulate our customers from the effects of global energy prices. But we can provide an unprecedented array of simple and effective energy management tools that will help customers reduce consumption and lower their monthly bills. And nothing could be smarter than that.

Kenneth W. DeFontes is president and chief executive officer of Baltimore Gas and Electric Co. His e-mail is kenneth.w.defontes@constellation.com.

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