Maryland regulators say utilities must improve reliability

State regulators investigating widespread, long-lasting outages from the derecho last summer ordered Maryland utilities Wednesday to take steps to improve reliability — and signaled a willingness to add penalties for "sub-standard performance."

But the Maryland Public Service Commission warned that substantial upgrades to the electrical distribution system would come at a cost to consumers. It directed power companies to outline by May 31 how they could speed up improvements in the next five years, along with an analysis of expenses and benefits.

"As long as major storms such as hurricanes, snow storms and Derechos occur, we will continue to experience widespread outages," the commissioners wrote. "However, we are not satisfied that the duration, extent and experiences of the outages faced by Marylanders are at an acceptable level."

Utilities are taking "incremental steps to improve reliability," but should make "a number of further improvements," commissioners said. In addition to their infrastructure recommendations, commissioners said they will hire a consultant to weigh in on whether utilities have sufficient staff and told the companies that power-restoration estimates to customers after the derecho were "inadequate."

The commission also directed its staff to recommend ways the distribution rates charged to customers could be structured so companies would get less money if reliability performance isn't up to par.

The commission already can levy civil penalties if companies' preparedness for and response to outages violate state rules. But commissioners said Wednesday that they saw no violations related to the derecho that would justify penalties.

Marylanders were less than pleased with performance after that storm, which hit without the days of advance notice typical for hurricanes — delaying out-of-state crews' arrival to help. Nearly 1 million customers in the state were without power at the peak of outages caused by the June 29 storm, and some didn't get electricity back for more than eight days during a searing heat wave, state regulators said.

In Baltimore Gas and Electric Co.'s territory, more than 760,000 customers lost power during the derecho or in the following days, including about 107,000 who were without electricity four days after the fact. BGE said heat-related problems and thunderstorms following the derecho added to the outage count.

The Public Service Commission said it received complaints and comments from hundreds of people statewide. Among them were the heads of the state's largest jurisdictions, who urged that overhead wires be put underground in "strategic" locations — trees falling on lines are a major cause of storm outages — and that utilities' infrastructure be examined to see whether equipment problems are contributing to outages.

With "the very real possibility of an increasing number of extreme weather events, it is clear that something must be done," wrote Baltimore's mayor and the county executives of Anne Arundel, Baltimore County, Harford, Howard, Montgomery and Prince George's in July.

Utility regulators across the country are wrestling with problems of aging infrastructure.

Members of the National Association of Regulatory Utility Commissioners estimated several years ago that it would cost roughly $4.2 trillion to upgrade electric, gas, water and telecommunications infrastructure over two decades, said Rob Thormeyer, a spokesman for the group. The price tag has probably gone up since, he added.

"Making the system more efficient and modernized is a top priority among commissions — and doing it in a way that doesn't overburden consumers," Thormeyer said.

Maryland's Public Service Commission said Wednesday that it wants a detailed cost-benefit analysis of infrastructure work so the opportunity to reduce the number or duration of outages can be weighed against the hit to customers' bills.

Even if utilities could have had advance notice of the derecho, and even if ongoing projects to reduce the number and length of outages had been finished, BGE and Pepco would have needed three to four days to get everyone's lights back on, the commissioners said. But customers told the commission that three- to four-day outages aren't acceptable.

"We need to understand, in concrete and real terms, what it would take to enhance the resistance and resilience of our Companies' distribution systems to reduce storm-related outages dramatically," the commissioners wrote.

Nancy Slaterbeck, a Rodgers Forge resident, was happy to hear the commission wants a plan. That's what she called for when she testified about her derecho experience.

"When you've got a problem, the problem continues to be getting worse, you don't keep putting a Band-Aid on it," said Slaterbeck, who lost power for five days after the derecho and for six days after Hurricane Irene in 2011. "You figure out how to heal it."

BGE — which has more than 1.2 million electric customers and about 650,000 natural-gas customers — said Wednesday that it agrees with regulators about the need to consider "hardening" the state's electric system.

"Electric systems in this country were not designed to meet customers' evolving expectations of uninterrupted power," said Robert L. Gould, a BGE spokesman. "All stakeholders must come together to evaluate options … to ensure that the investments we make to enhance the system will achieve the results we're seeking at a cost customers can afford."

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