BGE wins 'smart meter' approval but must bill customers after it's built

PSC conditionally approves high-tech metering system to be installed in customers' homes

August 13, 2010|By Hanah Cho, The Baltimore Sun

State regulators said late Friday that Baltimore Gas and Electric Co. can move forward with its plan to deploy "smart meter" technology intended to save customers money, but ruled that the utility can begin to recover its costs only after the system is in place.

The Maryland Public Service Commission's conditional approval comes after the company filed an amended proposal intended to address the state's top energy regulator's concerns that ratepayers would shoulder most of the financial risk to install the technology, which would let customers more easily track their electricity use.

In response to the PSC's initial rejection, BGE asked to recover most of the startup and upgrade costs through regular rate-increase requests to the commission and upfront fees — rather than by having a surcharge plan approved upfront for the entire amount.

But the PSC said Friday that BGE may recover its costs only through regular rate increases once it has built the high-tech metering program.

"We find it reasonable to expect that BGE will deliver a cost-effective [smart meter] system before cost recovery will be incorporated into rates, and the Company's customers should not be required to pay in full, with a return, if the system does not meet that essential standard," the PSC wrote in its order.

It was not clear at what point BGE could begin collecting payment.

BGE spokesman Rob Gould said the company will review the order, and "we will respond in due course."

The commission notes that BGE has indicated that it would not proceed with its initiative if "we do not allow cost recovery through a surcharge."

"Whether or not to go forward is, obviously, BGE's decision," the PSC said.

BGE estimates that 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 estimated the expense of smart meters at $835 million over 15 years, with a $200 million in federal stimulus money decreasing the cost of the initial five-year deployment. The U.S. Department of Energy is expected to decide by Monday whether it must shift the funds to other projects if BGE can't go forward with its program.

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 PSC said in its first 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.

In a statement late Friday, AARP Maryland advocacy director Hank Greenberg said the conditional approval "holds BGE accountable for delivering on promises it is making to customers about smart meters."

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