BGE's Smart Grid plan: what do you think?
Baltimore Gas & Electric has proposed switching all its customers to "smart grid" technology -- particularly advanced meters that provide frequently updated information about energy consumption -- that the company says will encourage them to conserve when it matters most, at peak times when we're paying the most.
Company officials said the initiative could result in demand reductions of 500 megawatts --- the amount of electricity generated by a new power plant, without having to pay to build it (or fuel it).
The program has a hefty price tag: $500 million, to be funded through bill surcharges that start at 38 cents for electric customers and 44 cents per month in the first year. These are expected to increase to an average of $1.24 and $1.52 respectively over the five-year program --- or perhaps less, if BGE receives federal stimulus grants for smart grid technology of up to $200 million for smart grid technology.
They submitted the initiative to the Maryland Public Service Commission on Monday, which will ultimately decide whether to give it a green light.
The Sun's business columnist Jay Hancock said the smart grid proposal will be worth it if it works out as planned -- with federal stimulus grants, and if the savings pans out.
And, he points out, the smart metering pricing could have been set up so that people who continue to use energy during peak periods pay more. Instead, they set up incentives: rebates to reward those who cut back at critical times, instead of penalties.
Still, consumer advocates such as the Office of the People's Counsel want to be able to carefully vet the terms of any potential deals before they are on the hook for the price of this program. They want to know why it has to be rolled out so quickly, instead of just installing the "smart" meters as the existing ones grow obsolete. There are also concerns about smart grid security. And they're just working out the standards for these smart grid devices now.
Most importantly, they question whether the actual savings will match the predictions.
How does BGE say the initiative would work?
In pilot programs, about 3,000 BGE customers got devices that showed them detailed information about their consumption. They also got lighted orbs that glowed green most of the time, but started to flash when critical peak periods (when demand and costs are high) were predicted due to high temperatures, for example.
When the peak times arrived (between 2 p.m. and 7 p.m.), the orbs switched to red, as a signal to consumers to conserve. During the tests, customers saw the light and reduced their energy consumption by about a third in the peak periods, which translated into cash back on their bills.
BGE says by reducing demand at these peak times, the company would pay less for the energy used by other customers who won't (or can't, for health or other reasons) --- cut their consumption during those times.
BGE also says that even those customers who don't change their consumption behavior would see savings, because these new meters would also serve as two-way communication hubs, allowing the company to read the meters remotely and get information about outages and other problems. That would eliminate about 100 meter-reader jobs and other costs, for about $600 million in savings, according to BGE.
What do you think about the proposal?
(photo: Jed Kirschbaum/Baltimore Sun)
Categories: Cheap/Frugal, Energy/Utilities, Greenies





Comments
Unfortunately the article does not describe what activities should be done at off-peak hours (baking, washing/drying clothes, running the dishwasher), so many reading this article won't fully understand what's happening here. These meters can save consumers money, but only if they understand how it all works.
Posted by: jimbalaya | July 14, 2009 8:03 AM
It really bugs me that any upgrade a power company makes comes with surcharges. To me installing smart meters is a cost of doing business. They say they will save 600 million doing it, so why should the customer pay for something that they will make a profit in the long run? If the customer wants an indoor meter, or something to make it easier to track their electricity then I can see charging for whatever needs to go in the house, but I just don't see how I should be charged for something that will help them save money.
Posted by: Joe | July 14, 2009 8:04 AM
This is criminal. It is just another increase in our bill and it’s got to stop! Do we really need a meter to tell us that if we turn off the power we’ll save money?!?
The idea of ending billing based on estimated usage is great but paying more for it doesn’t make sense to me. Did we have to pay a surcharge for the old meters? Isn’t that BGE’s cost of doing business? Don’t they collect money from us now for the eventual replacement of the old meters? Don’t they collect money from us for the maintenance and even future upgrading/expansion of transmission lines? Why is it that they need to pass on this cost specifically? When the cost of a postage stamp goes up will BGE add a surcharge to our bills for the added expense they incur?
Posted by: Scott | July 14, 2009 8:44 AM
"BGE proposes 'smart grid' initiative
Program designed to inform customers when they could save the most by conserving"
so, i get to pay for the new meter that i don't want, through a sur charge after i already pay for it thru tax money from a stimulus paln, then bge lays off all of their meter readers and saves god knows how much. wow what a deal!
where do i get the labotomy so so that, like you, i think i am getting a good deal here.
Posted by: Bill Hankins | July 14, 2009 9:46 AM
This upgrade enables every customer with the new meter to save money where they are unable to now. If it cost less to do my laundry, wash dishes, or run a computer during off peak times that is a change I'd gladly make, as would many others.
These new meters allow for that making it a well worthwhile investment. Do that math. It will cost anywhere from $25 - $50 over a 5 year period, depending on how much federal funding BGE gets; 50 being with 0 funding. The average savings of the programs that these meters make possible is around $100 a year.
Plus, if there wasn't a surcharge the savings that customers can earn would be lower. You can’t have your cake and eat it too. I'd much rather pay the charge for 5 years and get more money back for the actions I am taking rather than pay the way of someone who doesn’t care enough to make the simple changes such as when they do their laundry or run a computer in order to recoup the surcharge. It’s a no brainer.
Posted by: Jen | July 14, 2009 10:03 AM
" You can’t have your cake and eat it too. "
that will be the first time in recorded history.
Posted by: bill hankins | July 14, 2009 10:22 AM
Did anyone else notice that this is exactly what O'Malley proposed when trying to reach a settlement with BGE? Sort of interesting that suddenly BGE is trying to save us money.
Posted by: Scott | July 14, 2009 11:10 AM
anyone who believes that ANY company is out to save you money is either working for that company or delusional.
Posted by: bill hankins | July 14, 2009 11:15 AM
Encouraging customers to curtail use during peak periods might be a bit inconvenient for us as customers, but it does two things for the utility: keeps them from having to purchase/supply power that is more expensive than less expensive base load generation sources. To a degree, it also helps the utility defer building new power plants or upgrading facilities that deliver power from generation sources to its customers - for a while. At some point, they (and we as customers via rate increases) will have to bite the bullet and cough up the capital dollars to build new or replace existing infrastructure as a utility's load continues to grow in the future.
Posted by: Adrian Zvarych | July 14, 2009 12:08 PM
I think the smart grid proposal sounds like a good idea for managing energy and saving customers money in the long run. One thing not discussed is whether the smart meters would automatically report power outages. It seems like that would be a good thing to do.
Posted by: John S | July 14, 2009 12:49 PM
There is a contradiction in the article:
If the roll-out will cost BG&E $ 500 million, but BG&E will save $ 600 million due to payroll cuts, overhead costs, etc., then why are consumers going to be surcharged monthly to pay for the program?
This is just another way of hiding price increases by sticking it to the consumer twice.
If stimulus money is used, I'm sure BG&E will find a way to not deduct the full amount from the consumer surcharge to compensate for the Federal money.
And of course BG&E is only passing on to participants a small fraction of what they are saving by reducing their peak load.
Dennis --- my editor and I were just discussing this! I'll follow up with BGE. -- lfk.
Posted by: Dennis | July 14, 2009 1:16 PM
I can't believe someone would actually *want* this. Let me know how this works out during the next heat wave/high humidity period when BGE decides to turn *your* power back/cycle down *your* air conditioner.
Interesting point though...if they are controlling it...is it really *yours* anymore?
Posted by: KR | July 14, 2009 8:18 PM
As an inside yet objective authority on smart grid programs, everyone should understand in a bit more detail why these programs are beneficial. Utilities have to pay peak rates to import power from other areas or fire up peaking plants when local generation resources are tapped out. Unless a two-way communication infrastructure is established with the consumer, there is no reasonable way consumers could consistently lower their demand at the proper time to make the maximum impact on savings/congestion relief. I agree that utilities need to be held accountable to pass all reasonable cost savings back to the customers. The Maryland PSC should assist the public in that effort. Even though customers are feeling the pinch with this economic recession, so too are the utilities. Lower demand and much higher customer arrears in combination with greatly reduced credit availability are taking their toll on utilities which annually expend a great deal of capital on assets which take many years to generate a return on initial investment. All in all, these programs will be coming and it should greatly slow the incline of future rate hikes while putting more cash in customers pockets now. Yes, these smart meters will allow utilities to know exactly when customers are out of power. Utilities will be responding much more efficiently to outages. The public can't begin to understand how difficult it can be for utilities to accurately predict causes and solutions for power restoration solely by relying on customers to call in outages. A lot of efficiencies and enhanced customer reliability will flow from these system improvements. I would ask that folks be open-minded about these smart grid programs and stay informed. (Disclaimer: I do not work either directly or indirectly with or for BGE)
Posted by: smartgrids | July 14, 2009 9:09 PM
The part I don't get is that I shouldn't need a new meter to tell me when peak and non-peak hours are. I would gladly do as much as possible during non-peak hours, but not one can seem to tell me when those are specifically, and if my rates actually decrease during that time.
I know that I cannot make nighttime calls on my cell phone until 9PM. Why shouldnt this be clearly specified for power too? If I was told it would be cheaper to run your laundry and washer after 7pm, then I would do it. I don't need a meter to tell me when.
Good question. BGE's not proposing a strict time-of-use pricing plan, but rather something referred to as "nega-watts" --- where customers would be rewarded for using less than their normal consumption on days when demand is so high that it's also super expensive. --- lfk.
Posted by: Joe | July 15, 2009 7:45 AM
I like the smart meters. I think the main energy drain on hot summer afternoons (which is the example they gave) is from in-home air conditioning. We would be fine with less AC.
More power plants mean more smog. So if they could do without another power plant simply by raising consciousness about use of energy in peak hours, that sounds like a public benefit.
Many people think of air conditioning as a need -- and maybe it is for a few with medical problems -- but in my experience, what we need on hot afternoons is shade, ventilation, and less smog.
Posted by: Gregory Hartzler-Miller | July 15, 2009 5:28 PM
Beware the "Trojan Horse" - Based on their past behavior I find it extremely difficult to believe that BGE has my best interest in mind.
My energy consumption is primarily controlled by my job. When I'm away at work I consume very little energy in my home. Upon return from work I cook, bathe and do laundry as time permits, then it's off to bed. To suppose that I'll give up sleep to save energy costs is absurd. Additionally, if everyone waits for a specific time to "save" on energy costs that time frame will then become a peak usage time.
If I understand this correctly my gas and electric bill will also be higher and I will bear the burden of any "savings" realized, something I already do.
On the other hand, if BGE is able to push this through, the consumers will pay for the upgrading of all the old BGE meters in the community, BGE will no longer have to pay for the meter readers and the administration of the estimated usage billing program. Certainly the savings BGE stands to achieve will be fantastic. Sounds like "Smoke and Mirrors" to me.
Posted by: Jamie Hewes | July 17, 2009 3:58 PM