Maryland Commission Rejects BG&E’s Smart Meter Plan

The Maryland Public Service Commission’s rejection of Baltimore Gas & Electric’s ambitious smart meter deployment plan prompted expressions of shock and disappointment from the utility and the Department of Energy but was hailed by some consumer advocates.

Central to the commission’s rejection of the BG&E plan was the company's intention to recoup the initial cost of the meters through a surcharge rather than by building their cost into rates over time.

The BG&E meters would communicate with the utility to enable time-of-use charging. However, they would not be equipped to support “smart” household appliances or in-home displays designed to automatically reduce consumption during expensive periods or alert customers to price changes.

The commission therefore also expressed concerns that the plan failed to protect vulnerable customers from peak prices because, while it proposed website tools with which customers could monitor prices and use, it did not include any in-home displays capable of alerting customers when rates went up.

The plan also failed to include “concrete, detailed customer education plans” and to deliver the level of rate- and use-related messaging necessary to trigger consumer behavior changes, said the commission.

BG&E President and CEO Ken DeFontes countered the commission’s description of the meter surcharges as a “no-lose proposition” for the company by asserting that the meters would ultimately benefit all customers because demand reductions would result in lower rates across the board.

But the commission said that the company would benefit from the program not just through operational savings but through “supply-side benefits, such as the energy and capacity price mitigation, and monetizing in the PJM markets the value of projected energy and capacity reductions.” While those benefits are appealing to shareholders, it isn’t clear how they should be shared with ratepayers.

The PSC said it welcomed the smart grid in principle and invited BG&E to return to the table with a plan that took its objections into account. The Department of Energy, whose grant of $136 million would have paid for a portion of the smart meters, expressed disappointment at the decision and said it would move funds to proposed programs in other states if BG&E did not pursue the project further.

James Connaughton, executive vice president of BG&E's parent, Constellation, said that the company was “prepared to put in $280 million of our shareholders' money into advanced meter introduction. If we can't earn a reasonable return, it forces us to look for other, more productive ways to invest that money in clean energy, probably in other states."

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