If you can't stand the heat, don't sign up for PeakRewards

No one likes being hot and uncomfortable, so it is understandable that some people whose air conditioners were shut off for hours on Friday by BGE would be irritated. But that is what they signed up for. The problem was not with the PeakRewards program that gave BGE control over the thermostat but rather with some customers who evidently believe in free lunches. They agreed that in return for lower utility bills, they would risk temporarily losing their air conditioning. Last Friday, the hottest day in Baltimore since the 1930s, they experienced the downside of the bargain.

The 350,000 participants of the PeakRewards program let BGE turn off their air conditioner compressors during an emergency power event. In return, annual credits, from $50 to $100, are given on a sliding scale. Customers who get the maximum credit agree that their air conditioner's compressor could be turned off for entire hours during a so-called "cycling event." Smaller credits — $50 or $75 — are given to households who agree to let the juice to their compressors be turned off for fractions of the hours. Just by participating, customers receive some credits, even if their air conditioning compressor is never shut off. This year, participants in the PeakRewards program got $28 million worth of credits. When other factors are figured in, the program saves BGE customers an estimated $80 million a year. No one was complaining about the lower utility bills.


Typically there are about five "cycling events" in a year. But Friday, when temperatures topped 100 and produced extreme demands on the power grid, BGE began reducing power to PeakRewards customers. The complaints poured in, especially from customers who had agreed to a complete shutdown. A central complaint seemed to be that while customers knew they were agreeing to let their air conditioners be turned off during a cycling event, they did not realize that the event could last for hours. Now they know. Yes, it was an uncomfortable lesson.

BGE's performance was not without its problems. The radio signals that were supposed to turn compressors back on were slow. This meant that units that were supposed to be out of action for only seven hours stayed dormant for up to 10 hours. Phone lines to the utility were swamped. Customers who wanted to override the shutdown were often out of luck. BGE says it is taking steps to remedy these issues.


The PeakRewards program is voluntary, and 2,500 customers have withdrawn from it since last week. Rather than dropping out, unhappy PeakRewarders might want to drop their level of participation, as 1,300 households have done since Friday. Customers who had opted in at the 50 percent level got occasional power last Friday and reportedly were happier and cooler than those who opted for bigger savings and a complete shutdown.

What can't be forgotten is that the energy saving component of this program worked well. Switching off some compressors and reducing power to others saved 600 megawatts, the equivalent of a medium-size power plant. The program is also part of a mandated effort to reduce peak power loads by 15 percent by 2015. That's important not just for environmental reasons but because power during peak load periods is generated by switching on the least efficient generators on the grid. Such actions have a disproportionate effect on all of our electric bills.

Moreover, if the PeakRewards program were not in place, the Baltimore area could have experienced the brownouts and rolling blackouts that afflicted other systems last week and hit Maryland in 1993. In those unhappy instances, homes not only lost air conditioning but also lights and refrigeration.

After Friday's extreme heat kicked in the rarely-used provisions of PeakRewards, members of some households are reconsidering whether their level of savings is worth the occasional risk of living without air conditioning. That's perfectly reasonable — customers have now had a "peek" at the program's steamiest inconveniences and can decide whether the rate credits are worth it. But it doesn't mean BGE did something wrong or that the program is a bad one. It did what it was supposed to do.