BGE tries again on 'smart meter' technology

New proposal to regulators comes after June rejection by Maryland Public Service Commission

July 12, 2010|By Jamie Smith Hopkins, The Baltimore Sun

Three weeks after a rejection from regulators, Baltimore Gas and Electric Co. is trying to revive a plan to roll out technology it says would save customers money by helping them control energy use.

BGE said it filed an amended proposal Monday with the Maryland Public Service Commission to install "smart meter" technology, which would let consumers track their electricity use. The utility is still asking to pass startup and upgrade costs on to ratepayers but said it would look to collect most of the money through regular rate-increase requests to the commission, rather than by having a surcharge plan approved upfront for the entire amount.

Company officials also warned that BGE could lose $200 million in federal stimulus grants to help pay for the effort if the proposal is not approved by the end of the month.

"We remain committed … to ensuring Maryland stays a leader in this movement toward smart-grid technologies," said James L. Connaughton, executive vice president of corporate affairs at the utility's parent company, Constellation Energy Group.

He argued that the benefits of the smart meters would far outweigh costs for consumers.

BGE estimates the annual expense for the 15-year program would work out to about $3.60 for an average customer, while savings would add up to nearly $100 a year. All told, the company said, the 15-year program would save $2.6 billion.

BGE officials said they were "dumbfounded" by the rejection of the initial proposal in June. But a number of consumer-advocate groups were critical of the plan, and the state's top energy regulator shared their reservations.

The Public Service Commission said in its order that BGE was pushing too much of the costs and risks to customers. Consumers would be hit with surcharges immediately, while the savings would be "largely indirect, highly contingent and a long way off," commissioners wrote. They also said consumers should be allowed to opt out of the proposed mandatory "time-of-use" rates charging higher electricity prices for residential customers at peak times.

BGE argued then, and again on Monday, that commissioners misunderstood its proposal. But Mark D. Case, BGE's senior vice president of strategy and regulatory affairs, said: "We do make a number of changes that the commission had recommended."

The utility's first proposal asked for a surcharge on customers' monthly bills to cover all the program costs not paid for by the federal grant. The amended plan requests a surcharge for 25 percent of the expenses during the installation period, with the rest coming from regular rate-increase requests to regulators over time.

BGE also would check in semiannually with the commission about how the program is working, "a much more rigorous process of oversight," Connaughton said.

And he said the utility is now proposing that time-of-use rates be voluntary rather than mandatory. Customers who opt in would pay lower rates for using energy at off-peak periods, officials say.

BGE announced its latest filing after 5 p.m. Monday. It was unclear when the commission might take up the case.

Paula Carmody of the state Office of the People's Counsel, which represents consumers on utility matters, said her initial reading of the proposal suggests that the underlying business case remains the same. Her office questioned whether BGE's original plan was cost-effective.

"The company seems to think that this could be handled in a couple of weeks, by the end of July," she said. "We do not want to see a rush to judgment on this."

Hank Greenberg, director of advocacy for AARP Maryland, which was critical of the initial plan, said the new proposal "has to prove to have value to consumers."

BGE estimated the expense of smart meters at $835 million over 15 years, with the $200 million in federal stimulus money decreasing the cost of the initial five-year deployment. The U.S. Department of Energy said in a statement in June that it would "have no choice but to explore moving the funds to other projects" if BGE can't go forward with its program.

But even the $200 million "discount" provided by the federal government "cannot dictate the outcome here," the commissioners wrote in June.

BGE said Monday that it included a letter from the Department of Energy in its amended application, specifying that the agency will look at the smart-meter program's situation as of July 30 in deciding whether to shift the money elsewhere.

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