A proposal made by Baltimore Gas & Electric to install 1.2 million smart meters and institute time-of-use pricing was rejected on June 21 by Maryland's Public Service Commission.
The proposal was touted by BG&E as a way to save their customers billions of dollars and help them monitor and control their energy use, but the PSC objected to the utility's plan to pass on most of the upfront costs to their ratepayers. "The proposal asks BGE's ratepayers to take significant financial and technological risks and adapt to categorical changes in rate design, all in exchange for savings that are largely indirect, highly contingent and a long way off," the PSC said in its order.
The Baltimore Sun summarizes BG&E's argument:
BGE officials have said smart meter technology would allow two-way communication between customers and the utility. With these meters in place, consumers could track their electricity on an hourly basis. The utility would benefit from immediate information about outages and other system problems on the grid. It would also automate meter readings, saving the utility money because it would no longer need meter readers... BGE officials have said that the company's 1.2 million customers would save as much as $2.6 billion over the life of the meter.
The plan, Greentech Media reported, was estimated to cost $482 million for initial deployment and another $353 million over the 15-year life of the meters, bringing the grand total to $835 million. Two hundred million dollars of the deployment costs were to be covered by the federal stimulus grants BG&E was awarded by the U.S. Department of Energy to encourage smart grid projects. The remaining costs would be passed on to ratepayers in the form of a surcharge. The surcharge would start at 38 cents a month for electricity customers, with an additional 44 cents for those who also use natural gas. Over the course of the 15-year program, it would rise to an average of $1.24 a month for electricity customers and an additional $1.52 for gas customers.
Even with the $200 million "discount," the PSC found that BG&E's plan could not guarantee the type of savings needed to justify the surcharges. According to the commission, the majority of the estimated $2 billion in savings would stem from consumers reducing their energy use during peak hours in response to the implementation of time-of-use (TOU) pricing, which varies prices according to the time of day.
However, in their order commissioners noted that BG&E's proposal would not provide its customers with in-home displays and devices that would let them know how much they were using. A BG&E website would show data, The Sun reported, but only from the previous day. As such, the PSC concluded that "the Proposal contains no concrete, detailed customer education plan, includes no orbs or other in-home displays, and provides for grossly inadequate messaging, in our view, to trigger the behavior changes" necessary to generate actual savings.
At this point it is unclear whether BG&E will revise and resubmit its proposal, which it would need to do in order to keep its federal grant money. A new proposal, Greentech Media reported, would have to be free of a cost recovery plan using a surcharge and must include a business case that is not centered around mandatory TOU pricing.