July 18, 2010
Baltimore Gas and Electric Co. went back to the drawing board on smart meters and recently submitted a revised proposal to the Maryland Public Service Commission. The basics of what BGE wants to do haven't changed much, but now it's up to the PSC to allow the program to move forward — or put the long-term interests of customers at risk.
We've said it before and now we'll say it again: Maryland needs to get on board the smart grid movement to ensure affordable and reliable energy service in the future. BGE wants to install smart meters in every business and home to keep track of energy use and wirelessly transmit that information to a central office. With that kind of monitoring available, customers could cut their use on peak summer days and save on the order of $100 annually.
The PSC overruled the recommendation of its staff and rejected BGE's initial proposal in June. Several issues were raised in the decision, including how the meters would be financed, the balance of risks and rewards between customers and BGE shareholders, and the prospect of time-of-use billing (that rates might be set higher at peak times of the day).
In its latest filing, BGE attempts to address those criticisms by offering to spread the cost over a longer period of time and collect more of it through the regular rate-setting process, a change that would give the commission greater oversight. The proposal also makes clear that customers would not be forced to submit to dynamic pricing and that all cost savings to BGE (the need for fewer meter readers, for instance) would go to customers. And unlike the first proposal, the utility spells out exactly how it would educate the public about the smart meter program.
Admittedly, these smart meters have their limitations. The company will not offer real-time metering (the ability for a customer to see how much electricity is being consumed at the moment and make adjustments accordingly) — at least not yet. BGE officials are confident they will eventually be able to offer that feature as software upgrades can be made in future years with no inconvenience to customers.
All of those changes sound reasonable to us. And in that light, it's disappointing that the commission has chosen not to hold an evidentiary hearing until Aug. 5. By choosing to not to make a decision prior to July 31, the PSC may have jeopardized a $200 million federal grant that would help finance the program.
While the PSC shouldn't make a decision solely because the U.S. Department of Energy may choose to award the one-time grant to another project in another state after the end of the month, there was precedent for taking swifter action. Several years ago, the PSC approved BGE's Peak Rewards program on a two-day notice to allow the company to attract lower wholesale electricity prices at an upcoming auction.
Smart meters are too important a tool for promoting conservation for the commission not to look favorably on them. The company's two-year pilot project demonstrated that they can change customer behavior, and the revised proposal would put meters in homes as early as October of next year. That means most people will see savings by the summer of 2012. And it would put Maryland a major step closer toward Gov. Martin O'Malley's ambitious goal of reducing energy consumption by 15 percent in five years.
We can appreciate a regulatory body choosing to be cautious. But it's difficult to understand how the PSC is acting in ratepayer interest if the agency's failure to act more promptly results either in this crucial program being scrapped or $200 million more in start-up costs being borne by ratepayers.
