Maryland rejects Baltimore Gas and Electric’s Smart Grid Plan

By Linda Evers on December 10, 2010

On June 21, 2010, to the surprise of many, the Maryland Public Service Commission (“MPSC” or “Commission”) denied Baltimore Gas and Electric Company’s (“BGE”) Application to Deploy a Smart Grid Initiative (“Proposal”). Stating, “Although we share BGE’s (and others’) hopes, and even enthusiasm, for the long-run potential and importance of the infrastructure upgrades known colloquially as the “smart grid,” we find the business case for this Proposal untenable.” This decision jeopardizes approximately $136 million BGE was awarded from the U.S. Department of Energy (“DOE”) pursuant to the American Recovery and Reinvestment Act (“ARRA”) for smart grid funding. The total price tag for BGE’s filed plan was $835 million. The Commission stated that BGE should fairly allocate between itself and its customers the risk of the smart grid journey.

In denying the Proposal, the Commission goes on to discuss concerns it has about exposing customers to unproven technology that could quickly become obsolete due to evolving Advanced Metering Infrastructure (“AMI”) technology standards. The decision states BGE planned to install the ZigBee chip in its smart meters. Currently, ZigBee is the dominant technology in the AMI market. However, at this time, no appliance manufacturer has adopted ZigBee technology. In order to provide customers with the option of deriving the full benefits of the smart meters that BGE hoped to install, the meters should be able to communicate with smart appliances when they are created. The following quote from the decision highlights the Maryland Commission’s stance that it will not expose its ratepayers to the risks of being an early adopter:

“The field of modern technology is replete with examples of innovations once considered the leaders into a new era that were never widely adopted. All the federal funding in the world would not have made Sony’s Betamax a wise investment, for example. Those who invest in new technology as it becomes available often find themselves re-investing much sooner than they anticipated.”

This view by the Maryland Commission begs a few questions: “What if all the states took that stance? Would the smart grid and all its technological moving parts have an opportunity to mature and provide BGE’s ratepayers and the rest of us all the benefits of a modern electrical grid? Since smart meters will ultimately teach customers how to use less of BGE’s core product, electricity, doesn’t the very filing of the Proposal qualify as an investment by BGE?

On June 21, 2010, to the surprise of many, the Maryland Public Service Commission (“MPSC” or “Commission”) denied Baltimore Gas and Electric Company’s (“BGE”) Application to Deploy a Smart Grid Initiative (“Proposal”). Stating, “Although we share BGE’s (and others’) hopes, and even enthusiasm, for the long-run potential and importance of the infrastructure upgrades known colloquially as the “smart grid,” we find the business case for this Proposal untenable.” This decision jeopardizes approximately $136 million BGE was awarded from the Department of Energy (pdf) pursuant to the American Recovery and Reinvestment Act (“ARRA”) for smart grid funding. The total price tag for BGE’s filed plan was $835 million. The Commission stated that BGE should fairly allocate between itself and its customers the risk of the smart grid journey.

The field of modern technology is replete with examples of innovations once considered the leaders into a new era that were never widely adopted. All the federal funding in the world would not have made Sony’s Betamax a wise investment, for example. Those who invest in new technology as it becomes available often find themselves re-investing much sooner than they anticipated.