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BGE reboots smart grid proposal: Utility files request for rehearing, addresses regulators' concerns
[July 13, 2010]

BGE reboots smart grid proposal: Utility files request for rehearing, addresses regulators' concerns

Jul 13, 2010 (The Capital - McClatchy-Tribune Information Services via COMTEX) -- Baltimore Gas and Electric Co. hasn't given up the fight for its smart grid program just yet.

In a filing with the Maryland Public Service Commission yesterday, the utility asked state regulators to rehear its proposal on a new technology that would change the way consumers monitor their energy use.

The request follows the rejection of the $800 million plan last month, when commissioners criticized the proposal's financial risk placed on customers rather than shareholders and the ambiguity of cost-savings in the short term.

BGE, a subsidiary of Constellation Energy Group, has a lot riding on the decision. Denial of the project would result in the company losing a $200 million stimulus grant from the U.S. Department of Energy to install the two million new "smart meters" in the company's territory.

The devices would communicate live digital information between the utility and its customers, safeguarding the electric grid from threats of brownouts and blackouts. Their implementation would also allow the company to reward ratepayers with bill credits for reducing use during periods of peak demand.

The company was one of six utilities nationwide to receive the federal grant on the basis of a smart grid proposal.


But time is running short for the utility to seal the deal, so company officials hope the commission will re-examine the case quickly.

A federal contracting officer told the utility that the department will make a final decision on the grant by July 30.

"We are at the mercy of the Public Service Commission," said Jim Connaughton, Constellation's executive vice president of corporate affairs.

In the filing, BGE representatives spelled out responses to many of the questions raised in the commission's ruling and revised some of the proposal to address its concerns.

One concession BGE officials made was in eliminating their request for mandatory time-of-use rates. In this second draft, time-of-use rates would be optional.

The filing also addressed the commissioners' concern about a tracker surcharge system, a fee that would appear on customers' monthly gas and electric bills, intended to recover the costs of the initiative far in advance of any benefits to customers.

BGE's revised proposal offers a hybrid approach to cost recovery, by which 25 percent of expenses would be recovered with the surcharge and 75 percent of total costs would be financed through traditional rate hikes.

"We're only going to use the surcharge for a few years, and then it's going to stop -- it'll only be in effect for about four years," said Mark Case, BGE's senior vice president of strategy and regulatory affairs.

Case said the company has also worked to more closely align tangible benefits with the surcharge. The charges, which would begin in January, would be followed by the launch of a web portal in October 2011 that would provide more timely information on a customer's usage.

The information would be current within a 24-hour to 48-hour range and could be accessed with smart phones and other mobile devices.

Although some might question whether the expression "real-time" could be applied to day-old data, Connaughton said the advancement puts consumers many steps ahead of where they are today, receiving only 60-day old information about their usage.

"That's almost like looking through the wrong end of the telescope .... " he said. "Real-time is icing on the cake." BGE officials said the commission's concerns about costs and benefits were largely based on "misunderstandings." Company officials estimate that the new technology will create an average savings of $100 per year for their customers.

Utility executives said they believe many concerns over whether the smart grid plan will reap those benefits could be alleviated with a semiannual review process with the commission and routine oversight.

esauers@capitalgazette.com Copyright (C) Capital Gazette Communications, Inc., 2010.

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