Smart Grid Denied: When Regulators Say No

Securing a smart grid stimulus grant doesn’t always guarantee a utility’s smart grid project is in the clear. This week Maryland’s public regulator, the Maryland Public Service Commission, denied Baltimore Gas and Electric Co’s smart grid project request, which would have deployed 2 million smart meters for all of its customers, and cost an estimated $500 million over five years. Last October the DOE awarded BGE a $200 million grant — the largest available — for its smart grid project and BGE said it would match those funds with $250 million of its own financing.

While BGE has said its smart grid project would ultimately save its customers $2.6 billion, the MPSC said that customers were shouldering too much of the costs of the project and that the utility would need to contribute more of the funds for the project, and could resubmit a proposal. The request has been under deliberation by the MPSC for about a year.

To put it lightly, BGE is not happy:

BGE is deeply disappointed, frustrated, and frankly surprised, by the Maryland Public Service Commission’s (PSC) decision. . . We’re shocked that the PSC is jeopardizing the $200 million stimulus grant awarded by the Department of Energy to help pay for the initiative.

It’s not unusual for utilities to raise customer’s rates to support infrastructure projects, and it seems like all of the recent backlash over smart meters has had some influence over the regulatory body. PG&E has had the most problems and has admitted, and publicly-apologized for, failing to communicate the benefits and purpose of the smart meters to residents. As I reported after reading through PG&E’s 800-page report on the subject, PG&E spent very little time early on planning how to deal with customers. As a result there have been numerous complaints and even a lawsuit.

In MPSC’s response it emphasizes the risks and the lack of benefit of smart meters to the consumer: “The proposal asks BGE’s ratepayers to take significant financial and technological risks and adapt to categorical changes in rate design, all in exchange for savings that are largely indirect, highly contingent and a long way off.” Local news op-eds on the subject are also not too supportive of the utility project. Jay Hancock for the Baltimore Sun writes that the decision will “keep Maryland from being a guinea pig for the smart grid.”

To me this decision says that if utilities continue to have problems communicating the benefits of the smart grid to consumers, this won’t be the last regulator to deny a utility smart grid project.

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Image courtesy of Velo Steve’s photostream.

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