Smart Grid Gets Adult Supervision in Maryland

The company is asking its customers “to take significant financial and technological risks and adapt to categorical changes in rate designs, all in exchange for savings that are largely indirect, highly contingent, and a long way off.”

—Maryland Public Service Commission to BGE

With that conclusion, the Maryland Public Service Commission rejected Baltimore Gas & Electric’s plan to install more than 2 million electric and natural gas smart meters at a cost of $835 million.[1]

Yes but, the Feds will pay $200 million of that in stimulus grants, the utility pleaded in reconsideration.[2]

OK, we’ll listen to your arguments again but you must change two things or forget it.  Those two things:

  1. No mandatory time of use rates,
  2. No surcharges on existing rates to reduce costs.

Gulp!

That was the showdown in Baltimore that may have given cover to every other public service commission to put aside their political correctness, risk some Federal funding, and do their job of balancing the interests of shareholders and ratepayers.

The Maryland PSC wisely found that the benefits are unfairly being stacked on the utility side of the deal because it will take time—a lot of time, before the infrastructure, policy and technology changes required to make smart grid—well, smart enough—before customers get to see the beneficial results.  If customers are forced to pay now and get benefits later what incentive does the utility have to make the smart grid work as advertised?

Prudence is a wonderful thing.

It forces the parties to be accountable for delivering on their promises.  In this case smart grid promises to unlock a world of increased energy efficiency, reduced greenhouse gas emissions, and better energy use information for customers.  When can we get it?  Oh, well, that is going to take a while until the system is built out, standards are set, data is collected, new software, hardware and a zillion other gadgets, applications and devices are installed.  OK, but I’m not going to pay for any of those future benefits until I actually get them—and only then if the costs are prudent and the service is reliable.  And if you take too long, I might have choices from other providers and might not need you anymore.

So what?

So unlike Colorado where the euphoria about smart grid sped the installation of Smart Grid City to great fanfare only to be unpleasantly surprised by how much it actually costs—so much in fact that the costs almost swamped the benefits and the utility regulators forced a prudence review on the utility after the fact to cover their own backside.[3] Maryland just said no and now seeks to level the playing field.

The Feds are complicit in the smart grid push back we face.  Stimulus money is nice but it is forcing decisions before we are ready to make them and spending money on flashy meters instead of the grid essentials to deliver on the smart grid promise.

Why?

Because spending stimulus money on smart meters was thought to be popular while building the transmission lines and power electronics infrastructure to actually enable them to work to deliver the clean, renewable energy to market and reduce emissions is fraught with political peril.

Slow and steady is better than fast and uncertain when introducing new technology for something as important as keeping the lights on.  Meanwhile customers are just discovering what smart grid is and are not prepared to throw out a hundred years of average cost pricing and rate stability for the uncertainty of dynamic pricing just to get a smart meter on the side of their house and a promise of a better, cleaner future—-someday.

Smart grid must live into its promises—-and one of them is to make customers smarter so they can make informed energy and lifestyle choices for themselves.


[1] http://webapp.psc.state.md.us/Intranet/sitesearch/whats_new/Order%2083410_BGE%20AMI%20Application_CN%209208.pdf

[2] http://finance.yahoo.com/news/Baltimore-Gas-and-Electric-bw-3537928758.html?x=0

[3] http://www.tradingmarkets.com/news/stock-alert/xel_boulder-smart-grid-costs-blow-up-puc-orders-more-transparency-latest-rate-increase-charges-all-col-758721.html