AARP's letter to the PSC:

AARP opposes the request made by Baltimore Gas & Electric (BGE) to expedite consideration and approval of its proposed ‘Smart Grid Initiative’ which is estimated to cost more than $800 million over 15 years and would impose mandatory time of use rates. Expedited approval of a significant investment and fundamental change in pricing is contrary to the public interest. Nor is it necessary, as BGE implies, to secure federal stimulus funding. This request, combined with a similar request from PHI for its service territory, would add more than $1 billion in costs to customer bills. AARP urges the Commission to give these cases the careful scrutiny the consumers of Maryland deserve and expect.

It is unfair to parties, and the public, to fast track such a significant filing which would immediately approve a cost recovery tracker. BGE’s filing is more than 400 pages long and includes the testimony of five witnesses and extensive attachments and exhibits. AARP urges this Commission to establish a procedural schedule that will allow the full and fair opportunity for the parties to explore the evidentiary basis for BGE’s assertions about costs and benefits and provide testimony from parties other than BGE prior to any action by this Commission. To date there has not been any formal schedule or opportunity for an adjudicatory decision-making process on a proposal that is likely to have significant impacts on customer rates, terms and conditions of service. BGE’s proposed ‘legislative-style’ hearings are not adequate to fully investigate this level of investment.

As BGE notes in its July 22 letter, the Department of Energy requires utilities seeking federal funding under the American Recovery and Reinvestment Act (ARRA) must include in its application ‘correspondence from their local regulatory agency indicating when the approval process will begin and outlining the likely timeline.’ However, BGE does not need to have the cost tracker approved prior to applying for these federal funds. An expedited approval is not a requirement of the DOE guidance.

Of particular concern to AARP is fast-tracking BGE’s proposal to radically change the pricing structure in Maryland by instituting a mandatory time-based rate structure for all residential customers. BGE recommends a pricing structure for all residential customers that would raise rates in the summer to 16 cents per kWh for usage between 2 and 7pm every summer day. While BGE’s press releases have noted the potential for customers to earn a peak reward credit in the amount of $1.75 per kWh, that option would only exist for the estimated 12 critical peak day events that BGE projects will occur. As a result, residential customers will pay a higher price for essential electricity service for every summer day and only obtain any rewards or benefits if there is a critical peak event called by PJM and only for those few days in which such critical peak events are likely to occur. BGE’s proposal does not provide any bill impact analysis of this dramatic change in residential rate structure. Nor should such a dramatic change be rushed through the normal regulatory process.

Other concerns should also be explored in further detail and with an opportunity for formal discovery and opportunity to submit testimony on the record, such as the basis for BGE’s estimates of costs and benefits. AARP notes that BGE intends to implement remote disconnection of service as part of its metering proposal and this policy change also deserves careful review and consideration.

AARP supports grid modernization, efforts to improve efficiencies in the transmission and distribution systems, and demand response programs that are cost effective for ratepayers. However, the cost and magnitude of the proposed investment, coupled with BGE’s intention to establish mandatory time based rates, are compelling reasons to reject the proposed expedited schedule. A more reasonable schedule that allows for full and fair review of this proposal should be established and would be available for BGE to include in an application to DOE for federal stimulus funding.

AARP requests an opportunity to appear and speak at the Administrative meeting on July 29, 2009.