BGE trying again with smart grid proposal 

Posted: 7:38 pm Mon, July 12, 2010
By Danielle Ulman
Daily Record Business Writer

Baltimore Gas & Electric Co. submitted an amended smart grid proposal to regulators Monday, three weeks after its initial proposal was rejected as too financially risky for customers.

BGE asked the Public Service Commission for a rehearing on the proposal in order to win a speedy ruling and try to hold onto the $200 million federal stimulus grant attached to the project.

To allay the PSC’s concerns, BGE has proposed several changes to its original proposal.

“We think we’ve gone a long way in meeting the commission’s objectives,” Mark W. Case, BGE’s senior vice president of strategy and regulatory affairs, said.

Perhaps most important are the changes the company proposes to make to the way it will recoup costs associated with the $835 million project. Instead of using a surcharge on customers’ bills to recover all project costs, the company would recover 25 percent of costs through a surcharge and the rest through rate increases that have to be approved by the PSC.

The PSC would review spending twice a year to avoid uncertainty of what it would later approve.

The company said this method of recovery would save customers $160 million over the life of the project.

The PSC had expressed concern that making “time-of-use billing” mandatory would hurt consumers who are often in their homes during the day. Under BGE’s new proposal, customers could voluntarily sign up for time-of-use billing.

Customers who decide to get billed through time-of-use would pay lower rates for using power during off-peak hours, like nights and weekends, and higher rates during peak hours.

All customers would still be eligible for rebates for reducing power use during times of peak demand, like very hot summer days. BGE estimates customers would pay an average of $3.60 a year for annual savings of about $100 through the program.

The company also updated its customer education plan in its new filing, responding to a PSC gripe about the lack of details on the program in the original application.

“If you take all of those pieces together, it’s our view that that addresses the risk questions the commission had,” said James L. Connaughton, executive vice president of corporate affairs for Constellation Energy Group Inc., parent of BGE.

The smart meters BGE proposes to install in customers’ homes would provide two-way communication between the customer and the company, alerting BGE to outages and other issues. Customers would have the benefit of reviewing their daily power use through a website, providing them with more information to make choices about consumption and manage their bills.

Smart grid projects have swept through the country with the help of stimulus money in the last year. BGE said 26 utilities have installed more than 16 million smart meters, a figure the company says is expected to double by the end of next year.

The PSC’s rejection of BGE’s proposal last month came as a shock to the company, but Kenneth W. DeFontes, its president and CEO, acknowledged in a statement that the ruling did raise “important questions and concerns.”

“While we are extremely disappointed by the ruling, we are not ready to give up on the promise of enhanced electric reliability and customer service, dramatic energy conservation, significant environmental benefits, achievement of the EmPOWER Maryland goal…and more than $2.6 billion in savings to our customers,” he said.

Connaughton stressed that a timely response from the PSC would keep federal funding intact, cutting customer costs by $200 million.

The Department of Energy said in a letter included with the company’s filing that it will review BGE’s progress on July 30 to determine if it will continue to commit stimulus money to the project. DOE must allocate the money by Sept. 30.

The DOE did not say what kind of progress it wanted to see by the end of July, but Connaughton said approval would all but guarantee BGE’s project would keep the stimulus money.

“If there is nothing said by July 30 I think we’ll be in a state of problematic limbo,” he said. “The longer that takes during the course of the summer the more likely it would be that DOE would be reallocating the funds elsewhere.”