PSC Says ‘No’ to Smart Grid Proposal

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In what Mark Case, senior vice president of strategy and regulatory affairs for BGE, called, "a real setback for customers," the Maryland Public Service Commission told the utility giant to try again with their smart grid proposal. In a ruling released June 21, the Commission cited four points of contention with the proposal and invited BGE to submit an alternative to keep the program alive.

The “smart grid” is a combination of sophisticated electric and natural gas meters and a two-way communications network designed to gather and transmit information about utility usage. This process would allow the company to monitor power usage by the hour. The information collected would enable BGE to offer rebates to customers who reduced their usage during designated peak times.

Energy use in Maryland has increased 21 percent since the 1970s and is project to increase an additional 20 percent over the next 10 years, taxing the existing distribution system. To address this, skyrocketing energy costs, and overall conservation goals, Gov. Martin O'Malley's administration launched the EmPOWER Maryland initiative, with the goal of reducing energy consumption across the state by 15 percent by 2015. It calls on residents to adopt home energy saving measures.

BGE's Case said the proposal submitted to the PSC provided a way for families to work towards those goals. The PSC did not disagree. "We strongly support the overall goals of BGE's Proposal, which are consistent with many of the energy efficiency, conservation, and demand response initiatives that we have approved previously …," the decision read.

Neither did the Department of Energy disagree. While awaiting PSC approval BGE was awarded a $200 million grant – one of the largest in the country – to implement the program. This money will be reallocated if BGE does not move forward with the project.

Case maintains that during hearings on the proposal, BGE addressed many of these concerns – indicating a willingness to drop the surcharge and the time-of-use rates –, and pointed out the $50 million in the proposal designated for customer education.

The Commission states in the opinion, "It [the proposal] also is a request to establish a customer surcharge for advance recovery of the costs of the Proposal, thereby shifting all financial risk to BGE customers." It questions the proposal's assumptions stating, "… [W]e conclude that BGE ratepayers should not exclusively shoulder the burden in the event the costs associated with the Proposal are greater than expected, or the anticipated benefits do not materialize."

The language regarding the assumption of more risk for shareholders than for customers seems to be a sticking point for BGE. Case said the surcharge model is one used by other companies across the country. He added that the company's goal was to help customers reduce their costs, in the way a distribution company – one that doesn't control the actual costs of the energy – is able, providing a variety of incentives and rebate programs such as smart grid.

But, at this point, that seems to be off the table. "There isn't a clear next step for us," said Case. "You are going to continue to face bills at the same rate you are today."