Baltimore Gas & Electric Co. executives are exploring whether to resurrect a proposal rebuffed by state regulators that would have deployed "smart meters" intended to save customers money and help them better control electricity usage.
BGE executives said that they planned to meet soon with federal energy officials who earmarked $200 million for the project and that it appeared members of the Maryland Public Service Commission didn't understand parts of the meter proposal. One executive, James L. Connaughton, also blamed what he called "fear of innovation" at the PSC.
The PSC, the state's independent energy regulator, issued its order rejecting the smart-meter plan late Monday. The commission took exception to BGE's request that ratepayers pay for most of the cost of installing the meters and invited BGE to revise and resubmit its proposal. PSC officials declined to comment further.
"We don't have new info to put into the record," said Connaughton, executive vice president for corporate affairs and public and environmental policy at BGE's parent, Constellation Energy Group. "It was all there, and it was misunderstood."
Meanwhile, Gov. Martin O'Malley, who has championed efforts to reduce electricity consumption, said Tuesday that he agreed with the PSC's decision. "The problem with the proposal is that the consumer bears too much of the cost and almost all of the risk and not enough of the upside," O'Malley said at an unrelated news conference.
The PSC's decision puts into limbo the long-planned smart-meter program that BGE officials have said would save its 1.2 million commercial and residential customers as much as $2.6 billion. Mark D. Case, BGE's senior vice president for regulatory affairs, said on average ratepayers would save an estimated $1,400 over the 15-year life of the meters, while they would pay $217 in surcharges during the same period.
Case said it was only appropriate that customers pay for the smart-grid technology because they are receiving "100 percent of the benefits."
BGE proposed paying the up-front costs and sought to recover that money through customer bill surcharges that the PSC would have had to approve. The utility also proposed what it called a reasonable rate of return — estimated to be 8 percent, or $22.4 million — for its $280 million investment.
Connaughton noted that the utility has already put up some costs for the project. He called 8 percent a "bare-bones rate of return."
The smart-meter plan was estimated to cost a total of $835 million over the 15 years. BGE is in line to receive $200 million in federal stimulus grants through the U.S. Department of Energy designed to encourage smart-grid projects, which would have decreased the cost of the initial five-year deployment.
BGE President Kenneth DeFontes said the grant was now in "jeopardy" and executives plan to meet with DOE officials soon. Matt Rogers, the federal agency's senior adviser for Recovery Act implementation, has said it would divert the funds to other projects if the ruling prevents BGE from going forward with the program.
BGE officials have touted smart-meter technology as a way to 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. The new system would also automate meter readings for more savings. About $200 million of that savings comes from the dismissal of about 100 meter readers.
But consumer advocates opposed the proposal, saying the technology was unproven and that ratepayers were taking on most of the risk.
In their order, state commissioners wrote that all customers would start paying surcharges immediately, although they would not benefit until installations take place from 2012 through 2014. They also objected to part of the proposal that included mandatory "time-of-use" rates that charge residential customers higher electricity prices at peak times, saying customers should be able to opt out of that.
Case said BGE was not wedded to the "time-of-use" option and had told the commission that it could be eliminated from its proposal.
DeFontes said BGE is committed to smart-grid technology, referring to it as the "coolest thing to come along in 30 years."
"By walking away, we put ourselves way at the back of the pack," he said. "Once you get behind, it's very difficult to catch up."
Staff Writers Liz F. Kay and Andrea K. Walker contributed to this article.
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