BGE spokesman Rob Gould said an animal caused a brief electricity outage on Christmas morning. Gould:

Electric service was disrupted to approximately 160 customers Christmas morning at 8:50am due to damage caused to electric service equipment by an animal. All service was restored by 10:50am.

This Sun reader named Roger was not happy:

That's right, 8:33am, right as we're opening presents, heat shuts off, lights go out, tree lights off, no running water or toilets (since many MDers are on well). Merry Christmas Davidsonville. Power goes out once per month yet we continue to pay premiums. The answer? Buy a $10,000 whole house generator. Their incompetence is baffling. They claim only 150 were affected but we've already learned that is not true. There is truly no accountability with BGE. I really hope somebody writes something.

Posted by Jay Hancock at 1:58 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

Poorly planned tree-trimming contributed to the Pepco outages that upset everybody last year, says the Public Service Commission, which fined the utility $1 million as a result. The commission also faulted what it called Pepco's "poor communication with customers during storm events. This was particularly evident with regard to developing and communicating accurate and timely estimates of service restoration, which was a significant contributor to customer dissatisfaction."

Here is the whole press release from the PSC:

Maryland Public Service Commission Imposes $1 Million Initial Fine on Pepco Utility Faulted for Poor Management and Ineffective Practices

(Baltimore)—The Maryland Public Service Commission (Commission) has ordered an initial fine of $1 million against the Potomac Electric Power Company (Pepco). Commission Order No. 84564 finds that Pepco failed to maintain its system properly over a period of years; that those failures subjected its customers to excessively high frequencies and long durations of electric outages during storm events and on fair-weather days, and that Pepco compounded those reliability problems through poor customer communication.

In its decision, the Commission also found that reliability expenses in 2011 were increased because of “imprudent and inadequate expenditure and neglect.” Therefore

Continue reading "PSC hits Pepco for bad tree-trimming, communication" »

Posted by Jay Hancock at 4:15 PM | Permalink | Comments (1)
Categories: BGE/electricity
        

This is the brilliant-report-of-the-painfully-obvious headline of the day: "EDF Considers Dropping New Nuclear in Maryland," from Dow Jones. The French EDF's plans for a third nuclear unit at Calvert Cliffs have been deader than Lehman Brothers for more than a year.

The French company's partner, Constellation Energy, pulled out of the deal. They couldn't reach an agreement with Washington on subsidies to build the plant. With the plunge in natural gas prices and the failure of federal climate-change legislation, new nuclear plants, with all their complexity and financial risk, are wildly overpriced. The Fukushima disaster in Japan has made nuclear energy politically incorrect again.

(UPDATE: Another reason why it won't happen: As a foreign company EDF needs an American partner to build the Calvert Cliffs reactor. It doesn't have one. Exelon seems to have rejected its overtures. And it's not going to get one.)

Yet for months EDF has been pretending that a third reactor at Calvert Cliffs was still a possibility, that Maryland politicians cared about it and that somehow the company could use the prospect as leverage in opposing Constellation's agreement to be bought by Exelon.

EDF is one of Constellation's biggest shareholders and it owns half of Constellation's nuclaer-power division. EDF had been pressuring Maryland officials to block the Exelon deal, which it rightly fears will dilute its interest in and control of the Constellation assets. Now EDF seems to be shocked that it wasn't a factor in Gov. Martin O'Malley's settlement with Constellation and Exelon that got the companies to boost their investment in green (non-nuclear) energy in Maryland.

EDF undoubtedly feels spurned after it rescued Constellation from being bought by Warren Buffett three years ago and saved Constellation CEO Mayo Shattuck's job. My colleague Hanah Cho contacted EDF's people this morning. They declined to comment.

Here is the story from Dow Jones:

PARIS -(Dow Jones)- French state-controlled power behemoth Electricite de France SA (EDF.FR) is considering dropping all plans for new nuclear capacities in Maryland, following a proposed settlement between the Maryland governor and EDF's U.S. partner, Constellation Energy (CEG), a person familiar with the matter said Thursday.

"EDF is being side-lined here, nuclear is not even mentioned and the group seriously mulls dropping any new projects to develop nuclear" in Maryland, said a person familiar with EDF's thinking.

Posted by Jay Hancock at 10:25 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

As noted, Constellation, Exelon and the governor have agreed on a settlement in which, among many other items, BGE customers get a $100 credit on their bills. ALL BGE customers. Readers often worry that if they have switched to Veridian, Ambit, Washington Gas Energy or some other alternative electricity provider, they won't get this kind of rebate.

Don't worry. Everybody gets the credit no matter who their electric supplier is. The credit is funneled through the BGE part of your bill, not the electric supply part. BGE is always your electric delivery company no matter whom you buy your electric supply from. So all 1.1 million BGE customers get the $100, even if they shop around and buy something other than BGE's default electricity product.

Posted by Jay Hancock at 11:03 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

In its most caustic blast yet against Exelon Corp.'s proposed buyout of Baltimore-based Constellation Energy, the French EDF Group called the combined company's offers to Maryland citizens "insulting" and says the deal will be "harmful to Maryland, harmful to BGE and harmful to consumers." The transaction "fails to meet every standard imposed by Maryland's public utilities law and should be denied," EDF said in a filing Monday with the Public Service Commission.

EDF, of course, is the parent of Electricité de France, the giant utility owned largely by the French government. EDF is a big Constellation shareholder and also shares ownership with Constellation of the company's nuclear fleet. EDF rescued Constellation from being bought by Warren Buffett three years ago, saving Constellation CEO Mayo Shattuck's job. Apparently it expected Shattuck to be grateful. Instead, Shattuck is pursuing a deal that is OK for his shareholders but which EDF fears will harm its interests by burying its U.S. nuclear stake within the much larger combination of Exelon and Constellation.

So EDF is missing no chance to blast the transaction. Exelon and Constellation "persist with the claim that after the merger, BGE somehow will be locally managed and controlled" EDF said in Monday's filing, "despite overwhelming evidence to the contrary." (The whole company would be run from Exelon's Chicago headquarters.) It goes on:

The evidence at the hearing further established that the merger’s so-called benefits for Maryland and Exelon’s commitments to Maryland are both woefully inadequate and totally illusory. Maryland jobs will be lost, Maryland tax revenues will decline, and Maryland’s ability to influence its electric generation facilities will be severely limited.

Also Monday, Constellation and Exelon agreed to boost the commitments that EDF says are woefully inadequate and insulting. See Hanah Cho's story on the companies' promise to build additional generation capacity, including more green power than they had previously talked about. Somehow, however, I don't think that's going to change EDF's mind.

Posted by Jay Hancock at 8:52 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

This is small consolation to the BGE customers who were without power for a week after Hurricane Irene. But AP is reporting that as of this morning 50,000 Connecticut residents (does that mean 50,000 households?) were without power more than a week after the big snowstorm.

That seems even worse than BGE did after Irene. Eight days after Irene the Sun was reporting that "hundreds" of BGE households still lacked power.

Connecticut politicians are unhappy, Connecticut Light is apologizing, and it all looks familiar.
AP:

The electrical outages, the legacy of a storm that hammered the Northeast on Oct. 29 and 30, were largely an unpleasant memory by Sunday night for most of the 3 million who lost power at the height of the storm. But in Connecticut, about 50,000 residents remained without electricity by Monday morning, nine days after the storm. In New Jersey and Massachusetts, only a few hundred customers remained without power.

Posted by Jay Hancock at 8:23 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

Sens. Pipkin and Rosepepe are asking the Public Service Commission to make Exelon's proposed purchase of Constellation Energy dependent on a spinoff of Baltimore Gas & Electric, Constellation's subsidiary. Forget it, says Exelon President Chris Crane, which is what everybody expected. Exelon wants BGE's steady cash flow to balance its less predictable unregulated operations.

But it's an interesting thought experiment. How would BGE operating as a separate, publicly traded corporation change the way BGE works?

-- BGE's stock price could languish, as the market would probably get the message that Maryland regulators would never allow anybody to acquire the company.

-- Depending on how the company fared with future rate increases, BGE could end up paying a half-decent dividend yield. Investors would expect most of their return to come from income, not capital gains. But the spinoff would probably hurt existing shareholders.

-- For ratepayers, requiring a spinoff would be less risky than having the state seize BGE through eminent domain, which would require compensation paid to shareholders and lots of debt put on BGE's books.

-- Spinning off BGE doesn't by itself remove Constellation's grip on the regional wholesale power market or solve the larger problem of where Maryland gets its electricity. We need new generation plants not controlled by Constellation, which the senators propose would be built by BGE.

-- Having BGE itself build new power plants might be riskier for ratepayers than having BGE sign a long-term power-purchase deal with independent generation developers. (This is the direction the state is moving in anyway -- very slowly.) After a decade of deregulation, BGE has lost much (all?) of its expertise in plant development.

-- An independent BGE would be safe from financial raids by Exelon or some other deregulated holding company. But it might not be able to borrow money as cheaply as it can when owned by a bigger company.

Posted by Jay Hancock at 6:03 PM | Permalink | Comments (0)
Categories: BGE/electricity
        

Lisa Madigan, who obtained a huge settlement against Exelon Corp. a few years ago over alleged manipulation of the wholesale electricy market, has asked federal regulators to block Exelon's attempt to buy Baltimore-based Constellation Energy. The deal could give the combined company power to push up prices in Northern Illinois, she said in a filing with the Federal Energy Regulatory Commission.

Constellation and Exelon are both big sellers of electricity, and their marriage raises concerns about "market power" and increased prices in any market in which they operate. The market monitor for the PJM grid, which includes mid-Atlantic states but also northern Illinois, reached an agreement with the companies to limit their ability to push up prices if they merge. Madigan argues that the market monitor's analysis didn't include northern Illinois. From her filing:

".... the Illinois wholesale market is an island in the PJM regional transmission organization. There are limited generation and transmission facilities in the portion of PJM that serves northen Illinois, presenting a market with existing competitive restraints. Constellation is one of the few major suppliers that participates in the Illinois Power Agency power procurement events and that supplies power to the default customers of the Exelon subsidiary, Commonwealth Edison.... [The market monitor's analysis] is incomplete because it does not include a comprehensive review of the effect of the proposed merger on northern Illinois."

Posted by Jay Hancock at 10:13 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

The Public Service Commission hearings on Exelon's bid to buy Constellation Energy and Baltimore Gas & Electric started on Monday. The top draws -- Constellation CEO Mayo Shattuck and Exelon COO Chris Crane -- were also the leadoff act.

The hearings so far have contained no bombshells. But they shed new light on the proposed takeover, showing vividly how multibillion-dollar deals are about personalities and egos as much as about finances. We now know:

-- The merger would eliminate 600 jobs at the combined company, according to Wednesday testimony by Crane. Which jobs would be cut from Exelon and which from Constellation hasn't been decided. The companies have pledged to create jobs on net in Maryland, but that formula includes temporary construction jobs for building new facilities.

-- Offering Shattuck a big title with unspecified responsibilities in the combined company was seen by Exelon as part of the price it had to pay for Constellation. In prepared testimony Crane said that, according to Excelon CEO John Rowe, offering Shattuck the job of executive chairman in the combined company was "imperative" to get the deal done.

-- "Mayo would probably like to be CEO [of the combined company] but knows we will not pay a premium to give my chair away," Rowe told Crane in an email referred to in testimony on Tuesday. "Mayo would like to be 'executive chairman' for an undefined period."

-- Constellation's board asked Shattuck to ask Exelon if he could be CEO of the combined operation. "I said that was not a possibility," Shattuck testified.

-- Rowe and Exelon's board don't seem to have been crazy about the idea of Shattuck as executive chairman. However, Rowe wrote in an email, "with three-quarters of the board in our hands, I do think that the role of executive chairman might be tolerable..."

-- In 2008 when Constellation was veering toward bankruptcy, Constellation officials talked to Exelon about a potential bailout. "It was determined we felt that we might be able to put part of our lines of credit towards, to Constellation to help them through the situation," Crane said in testimony. They also talked about selling Constellation's nuclear plants to Exelon. (The talks came to nothing and Constellation was rescued by MidAmerican Energy and then by EDF Group.)

-- Even PSC Chairman Doug Nazarian, who is no stranger to lengthy examination of utility-company principals by hostile lawyers, seems to have been surprised by how long EDF Group lawyer Martin Flumenbaum grilled Crane and Shattuck. "Were you kidding about having a whole half-day for Mr. Shattuck?" Nazarian asked him late Monday. (He wasn't.)

Posted by Jay Hancock at 7:51 PM | Permalink | Comments (0)
Categories: BGE/electricity
        

Yesterday Boulder, Colo., voted to buy its electric utility from Xcel Energy and have the city run it. It's a firm move toward electricity re-regulation -- the kind that has been discussed casually in Montgomery County. It'll be a risky move by Boulder if it follows through. The city will have to sell bonds to buy the utility assets from Xcel, and higher taxes are involved.

The Daily Camera newspaper describes the vote as an effort by the city to reduce its CO2 emissions:

The drive to form a municipal utility grew out of the city's efforts to reduce its greenhouse gas emissions. In 2006, Boulder voters approved a carbon tax to fund programs that would help Boulder meet the Kyoto Protocol, which calls for a 7 percent reduction in greenhouse gas emissions below 1990 levels.

But, as Bloomberg notes, the vote also comes after cost-overruns to install smart meters in Boulder. Writing before the votes were counted, Bloomberg said a yes vote for "municipalization" would "effectively" end the smart-grid project, but it sounds like the meters are already installed. Bloomberg:

The referendum comes after Xcel Energy spent more than $44.8 million, exceeding its original budget estimate of $15 million, according to regulatory filings. The initiative is one of the nation's first "smart grid" pilot projects, designed to help customers reduce power use and cut down on greenhouse gas emissions. Xcel raised $950,000 for its campaign to keep the Boulder utility private, compared with $88,500 spent by backers of the referendum, according to city records.

Posted by Jay Hancock at 8:43 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Some of the testimony by Mayo Shattuck and Chris Crane at the energy-merger hearings has centered around what kind of benefit Exelon should provide Maryland in return for regulators approving its buyout of Constellation Energy, parent of BGE.

Exelon President Chris Crane had favored offering more renewable energy to the state than the 25 megawatts that ended up in the initial offer. But Constellation chief Shattuck believed bill credits are more important to getting approval, my colleague Hanah Cho reports. It's an interesting question. In Gov. Martin O'Malley's first term, bill credits would have been the way to go. He was focused on getting as much back for residential customers as possible.

O'Malley 2.0, however, seems more interested in green energy. He's pushing it in several ways, most visibly with a proposal to build a big offshore wind farm. I'm guessing the Public Service Commission, which is directly charged with approving the buyout, is still more focused on credits. During testimony Crane acted as if it's an either-or proposition: More renewable-based generation would mean lower bill credits. But that's a negotiating position. Don't be surprised if the final package includes a $100 credit for households and a little more -- maybe 40 MW -- of renewable generation capacity.

I don't believe that's enough benefit for what Maryland would give up by selling Constellation, but I don't get to vote. I also believe Maryland needs additional renewable-energy capacity more than it needs another $100 rebate for households. But as I said...

Posted by Jay Hancock at 8:46 PM | Permalink | Comments (1)
Categories: BGE/electricity
        

Constellation Energy CEO Mayo Shattuck has agreed to testify in person at regulatory hearings on Exelon Corp.'s proposal to buy Constellation and BGE, according to new filings with the Public Service Commission. The move comes after the Maryland Energy Administration asked the PSC to subpoena him as a witness, arguing that he needed to be available to answer many questions about the merger and his planned role at the combined company.

"In an effort to be fully transparent and to resolve any possible confusion, the Applicants will voluntarily produce Mr. Shattuck as a live witness in the proceedings on a panel with Mr. [Christopher] Crane," the No. 2 executive at Exelon, the companies' lawyer J. Joseph "Max" Curran III, wrote in a filing made Thursday.

That wasn't good enough for EDF Group, the French-controlled electricity giant that is Constellation's partner in a large nuclear energy venture. EDF has expressed concern that its multibillion-dollar investment in Constellation would be at risk if Constellation is absorbed by Exelon.

"... EDF submits that Mr. Shattuck does not need the protection of mr. Crane to address the many outstanding questions related to the proposed merger..." EDF's Thursday filing said.

Look for lawyers to grill Shattuck about his responsibilities, why he thinks the deal is a good one and how he would simultaneously act as chairman of the board and an employee reporting to Crane.

Posted by Jay Hancock at 6:02 AM | Permalink | Comments (3)
Categories: BGE/electricity
        

Landing in my mailbox is a fixed-price offer for natural-gas from IGS Energy. It's "a low fixed rate of 79.9 cents per therm that's guaranteed through your September 2012 billing cycle! That means you can lock in your rate now before your winter heating bills arrive -- and be assured of no price changes through next September."

This is a terrible price -- almost as bad as the 83.9 cents per therm that the Office of People's Counsel says is being offered by Spark Energy. As you can see, Baltimore Gas & Electric's standard, floating gas price hasn't been over 80 cents in more than two years. This month's price is 56 cents. Last winter the price never got over 64 cents. This winter's price is unlikely to be much different.

The one good thing to say about the IGS offer is that you can cancel it any time without an early-termination fee. But if you don't sign up for it in the first place, you won't have to worry about that.

Posted by Jay Hancock at 8:54 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

Yesterday I blogged about a Texas company offering prepaid electricity plans the way some companies sell prepaid phone plans. Payless Power will set you up with no deposit and no credit score as long as there is a positive balance on the account. And when the account is drained, they shut you off.

Maryland Public Service Commission spokeswoman Regina Davis responds:

I just wanted to respond to your post on smart meters. The PSC wants to reassure you and your readers that: (1) the company you referenced is not licensed in MD, (2) we have not authorized any company to offer prepaid electricity, and (3) no company could do so unless we gave approval.

It's hard to imagine Maryland would OK something like this. Meanwhile Paula Carmody, Maryland's People's Counsel representing consumers before the commission, says:

Prepaid options have been offered by a few companies for a number of years (e.g. Arizona’s Salt River Project), and Texas has been actively pushing this as an “option” for customers. There are a number of specific consumer concerns that have been flagged by utility consumer agencies, in addition to the general concern that prepay is not the way to go for essential electric and heating services. I’ve attached a NASUCA resolution on this issue, FYI.

The resolution by the National Association of State Utility Consumer Advocates expressing concerns about prepaid plans is below the fold.

Continue reading "PSC: Maryland doesn't allow prepaid electric plans" »

Posted by Jay Hancock at 6:04 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

There is much anxiety and distrust over the coming of smart meters in many communities where they are appearing. BGE will start installing them in Baltimore-area households soon. Smart meters are basically computerized electricity meters to record your kilowatt usage by the minute and beam it to the electricity company.

They give utilities the power to shut off or turn on your juice more or less immediately, and eventually they could even feed fluctuating daily wholesale prices straight to your household account, letting you respond accordingly.

Here is a smart-meter feature I hadn't heard about, which seems troubling. Thanks, Carol, for bringing it to my attention. A company in Texas, Payless Power, is offering pay-as-you-go, no-deposit elecricity accounts similar to what cellphone companies offer. You pay for the juice in advance. If you don't pay, you don't get power.

I understand that kilowatts need to be paid for. But electricity isn't a cellphone. Pay-as-you-go cellphone customers generally pay more per minute than folks with contracts. Pay-as-you-go electricity service has the potential to offer all the convenience and affordability of payday lenders and rent-to-own furniture stores. Here is Payless Power's the whole press release:

Payless Power Now Offers Prepaid Electric Service in Texas Utilizing Smart Meters

Get SmarTricity with Flex Pay for prepaid electric service in Texas with NO deposit, NO credit check, and NO long term contract .

 Fort Worth, Texas (PRWEB) October 17, 2011

Payless Power, a leading no deposit electric company in Texas, is now utilizing smart meters as part of its pay-as-you go electricity plans to help customers better manage their usage and budget. By monitoring electricity usage in real-time, smart meters let retail electric providers and consumers know just how much energy has been consumed at any time during the course of a month; therefore, by using these advanced meters, the consumer will be notified of how much energy they are consuming daily as a way to monitor usage and reduce their electricity costs.

 According to Brandon Young, a principal in Payless Power, prepaid services utilizing the smart meter data makes billing more accurate and timely

Continue reading "Smart meters allow pay-as-you-go electricity" »

Posted by Jay Hancock at 10:31 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

For three years it's been a bear market for natural-gas sellers and a boon for consumers. The wintertime price for BGE's natural gas has dropped from almost $1 per therm in 2008 to like 60 cents now. The big factors, of course, are the bum economy and huge new gas supplies made available by hydrofracking of shale formations.

A ConocoPhillips commodities analyst says this may not go on forever and he gives several reasons, including regulation of hydrofracking and rising demand for natural gas as a relatively clean fuel for electricity generation. From Platts:

"The talk of shale makes everyone think we're way oversupplied," said Jim Duncan, ConocoPhillips' chief analyst and commodities markets strategist, at the LDC Gas Forum Rockies & West in Los Angeles. "The reality is that we're not. The signposts are already here."

However, Platts reports that Duncan "remained bearish" on natural gas. My advice to BGE customers hasn't changed: Go with BGE's or WGES's month to month floating price. The deals that lock in your price probably won't save you money this winter and they don't let you lock in long enough to save money in future winters.

Posted by Jay Hancock at 2:06 PM | Permalink | Comments (0)
Categories: BGE/electricity
        

Corporate buyouts of local companies always quickly shift jobs and resources out of town, but it didn't used to be this quickly. The apparent new trend for important Baltimore companies selling to out-of-towners is to shift the shareholder vote on the deal to a venue far away from the company's home town.

Nolan Archibald was so proud of selling Black & Decker to Stanley Works that he moved the shareholder vote to the Dulles Marriott hotel. They couldn't even come up with an excuse for having it there. "Since the meeting is only days away, we have no comment" on why the meeting is in Virginia, Black & Decker spokesman Roger Young told me at the time.

Why is Constellation having its meeting in New York? It's "a central location for our institutional shareholder base," a company spokesman told my colleague Hanah Cho. No, that's not it. The real reason is probably that Constellation's board is worried about embarrasing demonstrations outside the meeting and awkward questions from longtime Baltimore shareholders inside.

My 2010 column on Black & Decker's merger-meeting venue:

Taking a play from the Baltimore Colts, Black & Decker's headquarters is heading out of town on the sly.
For years the toolmaker has held its annual shareholder meeting in or near its Towson headquarters. The company's stock is widely owned in metro Baltimore, its home for a century.
But Friday's meeting, at which shareholders are expected to approve Black & Decker's sale to Stanley Works, isn't even happening in Maryland. If you want to vote in person or express an opinion, you'll have to make it by 9 a.m. to the Washington Dulles Airport Marriott in Virginia, 70 miles from Towson.
Putting the meeting at a Black & Decker factory in Mexico could hardly have cordoned it off more effectively from Baltimore. Instead of darkness and Mayflower moving vans obscuring the end of a Baltimore institution, it'll be the Capital Beltway at rush hour.

Read the whole thing here.

Posted by Jay Hancock at 10:23 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

Sunday's column was about why the Maryland Public Service Commission should reject Exelon Corp.'s applicaiton to take over Constellation Energy and BGE. One reason is what knowledgeable people describe as Exelon's and utility ComEd's unstated motivation to close their Zion Station nuclear plant: to decrease the supply and increase the price of electricity.

There has been a lot of discussion about this on the Atomic Insights site, including this post by Rod Adams, titled "Exelon's Strategy is Working for Stockholders but not Always for Customers." Adams:

When I dug into Exelon’s corporate history and current market position, I realized that its analysis of the economics of restarting Zion might have something to do with concerns about the effects of a new supply on the prices for electricity in their current markets. Since Exelon is operating a large number of plants already, just a 10% drop in sales price could overcome the benefits of selling a higher volume from the new supply. In the electricity business, a huge financial risk that is well known and understood by decision makers is “overcapacity”.

Posted by Jay Hancock at 3:51 PM | Permalink | Comments (1)
Categories: BGE/electricity
        

Exelon Corp. is seeking regulatory approval to buy Constellation Energy, parent of BGE. As I wrote on Sunday, the deal raises all kinds of concerns. Among them is the quasi-monopoly power that the combined company would gain in the mid-Atlantic generation market. The combined company would own quite a bit of generation capacity in Maryland, Pennsylvania and New Jersey.

To try to overcome sure objections from antitrust regulators, Constellation and Exelon agreed to sell off three of Constellation's older, coal-fired generation plans: Brandon Shores, CP Crane and HA Wagner. Joseph Bowring, who runs the independent market-monitor operation for the mid-Atlantic grid, objected that market concentration in the region might not be improved and could even worsen if the plants were sold to a third company that also owned plants in the area.

Now, in a letter to regulators, Bowring says the companies have agreed to a bunch of restrictions that would cause Bowring to drop his objections. The chief restriction is a list of companies to whom the coal plants cannnot be sold, including AEP, First Energy, Dominion, GenOn, Calpine and PPL. This significantly reduces the potential bidders and, if anything, may increase the uncertainty for the people working at those plants.

The other thing to note about the agreement is that, once again, it erodes any notion that the PJM wholesale market is efficient, free or fair. In addition to restrictions on who can buy the plants, Constellation and Exelon agreed to a bunch of fussy rules about bidding behavior etc. over the next 10 years.

Among them: The combined company has to "calculate its RPM auction Market Seller Offer Caps, as that term is defined in Attachment DD of the PJM Tariff, using the methodolgies set forth in Attachment DD of the PJM tariff." Energy bids from non-nuclear units "will be consistent with the physical capabilities of the units." (This rule all by itself is quite telling.) Offers from peaking gas units must calculate unit costs "in accordance with the PJM Cost Development Guidelines as set forth in PJM Manual No. 15, plus (2) the higher of ten percent of such costs or the applicable percentage of cost permitted under the PJM Tariff to the extent a unit is a frequently mitigated unit, plus (3) an adder not to exceed $1.00/MHw."

A real market wouldn't require a bunch of Calvinball rules and a bunch of bureaucrats to administer them.

Posted by Jay Hancock at 12:16 PM | Permalink | Comments (1)
Categories: BGE/electricity
        

On Tuesday BGE was boasting about its improvement in J.D. Power's ratings of gas utilities, which just came out. BGE has historically also done OK in J.D. Power's scores for electric utilities, rating above average for the region. But the latest electric ratings came out before BGE's less-than-par performance after the recent storms. Thousands of households were out of power for many days.

UPDATE: BGE spokesman Rob Gould says I'm stretching when I say the search traffic reflects anger. Much of the searches may have been simply for information, he says. BGE was very active in social media and on the Web, so some of it reflects that activity, Gould says. OK, so I don't know the emotions of all the people who searched on BGE in those days. But this was a big negative story for BGE, just like the 2006 rate increases. Anger was certainly part of the mix.  

To get some idea of how impatient and focused BGE customers were, check out the Google trends graph below. The top graph tracks worldwide Web searches for BGE. The lower one tracks news mentions of BGE. The last time BGE had this much bad publicity was in 2006, right after the deregulatory rate caps came off and prices rose by the famous 72 percent.

Now look at the spike in BGE searches for August -- three times as much volume as in 2006. Yeah, fewer BGE customers may have been online in 2006. But the graphs still suggest that people get a lot more exercised about having no power at all than they do about what they pay for it. And they suggest that BGE might not do so well in the next J.D. Power poll.   

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (8)
Categories: BGE/electricity
        

The stock of Constellation Energy Group closed at $39.66 on Tuesday, its highest price since 2008, when the financial crisis and imprudent borrowing almost drove the company into bankruptcy. This suggests that the arbs and other investors believe the deal with Exelon Corp. will go through. Constellation has agreed to be bought by Exelon in a merger valued roughly at $8 billion.

Institutional investors that I talk to were quite worried about how Gov. Martin O'Malley would react to the merger proposal. O'Malley has jousted with Constellation and subsidiary BGE for years, and previous attempted mergers by CEG and BGE have foundered on the rocks of regulatory resistance in Maryland. My impression is that people were expecting more price rebates for BGE customers and fewer green-energy requests in the O'Malley administration's filings that were made last week. The buoyancy of the stock price suggests they think things will work out. The Public Service Commission will ultimately make the decision, but it is composed mostly of O'Malley appointees.

Posted by Jay Hancock at 9:21 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

I was surprised at how much the O'Malley administration wants the combined Exelon/Constellation Energy to raise its contribution to renewable energy in the state. But perhaps I shouldn't have been. Combined with his proposal for a big offshore wind farm and other efforts to green the state's energy portfolio, this makes clear that Gov. O'Malley sees renewable energy as one of the main legacies he wants to leave for his second term.

Exelon didn't appear to flinch in reaction. Don't forget that it's the Public Service Commission, not the O'Malley administration per se, which has to approve or reject the deal. But the PSC is largely an O'Malley creation. In any event, gone is the intense O'Malley administration focus on price reductions for customers of BGE, Constellation's subsidiary. Now he's all about the environment.

The risks raised by Malcolm Woolf, head of O'Malley's Energy Administration, are also worth mentioning. In the event that Exelon ever does an Enron and goes bankrupt, BGE must be protected as much as legally possible. Out-of-state ownership for an essential economic monopoly is full of potential problems. There is also the market-power problem, in which an Exelon-Constellation combo would give the company too much control over regional generation facilities -- even with the divestiture of several coal plants that the companies have proposed.

And, of course, requiring several hundred megawatts of new, green, Maryland generation from the combined company would only exacerbate the market concentration. Should be an interesting decision process.

Posted by Jay Hancock at 8:23 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Victoria Worden of Bel Air called to say she thought her August BGE bill was too high. Late last month BGE meter readers were helping restore power, with the result that BGE couldn't read about 170,000 meters -- including Worden's. Instead BGE sent out estimated bills. In 2010 Worden's August bill was in the $50 range, she says. This year, after BGE estimated it, the August bill was way higher -- $75.50, she says. And the average temperature for this August was a degree cooler than last year, according to BGE.

"$75 is way out of line," Worden says. She's not even sure she ran the AC last month, and she expected the bill to be much lower. Certainly lower than the bill from this July, which was really really hot. Especially since, after Hurricane Irene, she says she didn't have any electricity during part of August for almost 40 hours! But her bills were about the same for both July and August.

UPDATE, 11 a.m.: BGE put out a press release on this this morning, saying: "Baltimore Gas and Electric Company (BGE) today announced that as a result of Hurricane Irene, meter readers were assigned to storm duty and did not read any gas or electric meters from Aug. 30 – Sept. 1. On August 29 and Sept. 2, some, but not all meters were read." BGE is saying 150,000 households were "affected," but the total number of homes with unread meters was 170,000, including those on budget billing. BGE's full press release is below the fold.

If your bill seems too high for August and it's a hassle, do what Worden did and call BGE at 410-685-0123. She says they agreed to bill her zero for August and then put everything on the September bill once they read the meter. (If your estimated bill proves to be too high, BGE is supposed to credit the overbilled amount the next time the meter is read.)

I had a similar experience. My July 2011 bill was $277, and I figured August would be way lower. But it wasn't. BGE estimated that I owe $252 for last month. My average daily kilowatt use in August, according to BGE's estimate, was 25 percent more than it was in August 2010 -- even though, as mentioned, this year's August was cooler than last year's. (I didn't lose power after the hurricane, however.)

I asked BGE for a response to all customers who may believe they were overbilled. (BGE doesn't give me any special treatment, and I didn't ask them to change my bill.) BGE has software that estimates bills when meter readers can't get out, says Jeannette Mills, the utility's senior vice president for customer relations. The estimate is based on actual, metered usage of similar customers, BGE says. Sometimes it overestimates. Sometimes it underestimates, Mills said.

But it doesn't make allowances for when your power goes out. So there are probably other folks out there like Worden, with overestimated bills.

Mills denies that this gives a big boost to BGE's cash flow. "There is no windfall," she said. "There is no significant positive cash flow increase." BGE spokesman Rob Gould says that eliminating estimated bills will be one of the benefits of smart meters, due to be installed starting next year. They'll beam your kilowatt use straight to headquarters every day.

If you're on budget billing, where BGE smooths out seasonal variations to make your invoice more or less the same every month, your bill probably wasn't significantly altered by an unread meter last month, BGE says.

Read BGE's full press release below:

Continue reading "Did your estimated BGE bill seem too high? " »

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (29)
Categories: BGE/electricity
        

Maryland Public Service Commission to Hear Public Comment on Hurricane Irene Outages

(BALTIMORE)—The Maryland Public Service Commission (Commission) will hold hearings to receive public comment related to Hurricane Irene. These public hearings, part of Case No. 9279, pertain to electric service interruptions to BGE customers due to the hurricane. In the Commission’s September 1 Order No. 83406, it was noted that “Hurricane Irene severely impacted electrical service to a significant portion of the State of Maryland beginning on August 27, 2011 and, in some instances, the lack of electrical service continues as of the date of this Order.

 Because of questions that continue to be raised related to storm preparedness and storm restoration efforts, the Commission will conduct a consolidated inquiry to review the preparedness and performance of the utilities in responding to the major outages…” As part of that inquiry, the Commission will hold public hearings as follows:

• Tuesday, September 27, 7 p.m. Baltimore County Office Building, Room 106 111 W. Chesapeake Avenue Towson, Maryland

• Tuesday, October 11, 7 p.m. Wohlman Assembly Hall War Memorial Building, 1st Floor 101 N. Gay Street Baltimore, Maryland

Individuals who cannot attend in person may send written comments to the Commission by October 17, 2011. Originally signed paper comments should be addressed to David J. Collins, Executive Secretary, Maryland Public Service Commission, William Donald Schaefer Tower, 6 St. Paul Street, 16th Floor, Baltimore, Maryland 21202, and reference “Case No. 9279 – Public Comment.”

In the event additional evening hearings for public comment are scheduled regarding the preparedness and performance of other electric utilities in the State, the Commission will issue a further notice with the time, date and location of each such hearing. ##

Posted by Jay Hancock at 3:24 PM | Permalink | Comments (16)
Categories: BGE/electricity
        

From Barry Rascovar's column today:

State and county bureaucracies are not known for responding with alacrity to consumer complaints, especially when they involve infrastructure repairs.

Example: Before agencies even noticed, 100 million gallons of raw sewage had spilled into the Patapsco River during the last hurricane due to broken, malfunctioning or out of service sewage pumping stations. By the time bureaucrats stemmed this outflow of human waste, perhaps twice as much effluent had polluted the Chesapeake Bay.

Imagine what utility repairs after Irene would have been like had local governments — desperate to trim staffing to balance their budgets — were put in charge.

Imagine if Montgomery County, instead of Pepco, had been responsible for restoring customer outages after last winter’s blizzard. As poorly as Pepco performed, local government would have had been even more dilatory.

Posted by Jay Hancock at 10:56 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

Speaker of the House Mike Busch called me, apropros of my earlier post on the possiblity of BGE giving priority to bigshots for power restoration, to tell me tongue-in-cheek that he got left off BGE's secret list.

"I've been out since Saturday," Busch, who lives in Annapolis, said Thursday morning. "Everybody in my community looks at me" and wonders if he's really important, "I said I'm calling Jay Hancock."

Like thousands of other householders, Busch can testify that you take electricity for granted until you lose it. No fridge. No lights after 8. "It's amazing how much you don't realize the importance of electric power."

BGE says it has no secret list to restore power first for political heavyweights. Nor should it. The darkness in the Busch neighborhood supports BGE's assertion. The Speaker of the Maryland House of Delegates: wielder of power, master of billions -- and just another hapless BGE customer, stumbling around in the gloom with flashlights.

Posted by Jay Hancock at 11:28 AM | Permalink | Comments (6)
Categories: BGE/electricity
        

If I were the boss of Baltimore Gas & Electric I would be tempted to set up a secret plan to treat Very Important Neighborhoods differently than those of the plebes. Did the governor's lights go off? Put him at the top of the list for repair.

No, wait. Put the members of the Public Service Commission first. They're the ones who will approve or reject the application by BGE parent Constellation Energy to merge with Exelon. They're the ones who are developing reliablity standards for BGE and other utilities. Naturally I asked BGE whether it gives special treatment to important public officials. And I asked the governor, the mayor and the PSC commissioners about their electricity experiences last weekend during the hurricane.

BGE denies giving special attention to anybody. "The answer is no," says company spokesman Rob Gould. "We are not putting anyone in any priority order as it relates to special customers." What about PSC Chairman Doug Nazarian? He tells me his power was back on by Sunday afternoon. (As I write this Tuesday evening, about 200,000 BGE homes still lack power, according to the company's storm-center Web site.) "We don't even know his address," Gould said. "We don't mark neighborhoods for special folks."

UPDATE: The remaining PSC commissioners got back to me this morning. Harold Williams says his power went out at 5:30 a.m. Sunday and came back on at 12:30. Kelly Speakes-Backman says:

I have BGE. I lost power at 8:30 sat night, got it back Tues Monday afternoon. Lost it again yesterday Tuesday for a few hours in the afternoon. I was told by the customer service person there was some switch problem affecting 3000 customers that time. Oh, and we borrowed my cousin's generator so no spoiled food, but we're on well so we had no water.

Gov. Martin O'Malley's power flickered on and off but never went totally out, said spokeswoman Raquel Guillory. Two PSC members -- Lawrence Brenner and Kevin Hughes -- live in Pepco territory, which was hit much less heavily by Irene. They said they didn't lose electricity, either. I was unable to get responses from the PSC's Harold Williams and Kelly Speakes-Backman.

Mayor Stephanie Rawlings-Blake lost power for "over 24 hours," said spokesman Ryan O'Doherty, but she wasn't sure when it came back on because she was in the city's emergency operations center. "She did have to throw out food," O'Doherty said. (For the record, my power in Ellicott City never went out.) Here is the response from PSC Chairman Nazarian, who says he has "no idea" whether his neighborhood gets special treatment from BGE:

My power went out sometime Saturday night and came back on late Sunday afternoon. We plugged our refrigerator into a neighbor's generator for a while, but did throw out some spoiled food, too. A large tree branch fell in my front yard, but missed our house and the neighbors', so fortunately no impact. We haven't had water in our basement for years and didn't this time. I have no idea whether

Continue reading "Does BGE restore power to big shots first?" »

Posted by Jay Hancock at 6:43 PM | Permalink | Comments (10)
Categories: BGE/electricity
        

The utility reliability standards required by the legislature and being developed by the Public Service Commission are largely the result of unhappiness with Pepco, which serves Washington and its Maryland suburbs. Pepco did a miserable job preventing and fixing outages in summer and winter storms in 2010. This year it ranked dead last in customer satisfaction among large, investor-owned utilities.

But Pepco caught a break with Irene -- or maybe the tree-trimming and hardware installations that it says it has done since last year made a difference. On Monday fewer than 40,000 Pepco customers were without power, the Washington Post reports. In BGE territory on Monday 350,000 customers lacked power, The Sun says.

The Post's headline: "In key test, Pepco's reputation weathered the storm." Now the pressure is on BGE, which has largely escaped criticism over performance in other recent storms even though it logged many outages. In BGE's case you can probably expect what happened with Pepco: aggressive tree trimming -- and protests about that.

Posted by Jay Hancock at 9:45 AM | Permalink | Comments (23)
Categories: BGE/electricity
        

Update: Constellation seems to have pulled the plug on the ungated link below. You're now prompted for a login/password. Apparently the company doesn't want the inspiration and joy to spread too widely.

Here's a fairly ridiculous piece of propaganda the employees of Constellation Energy are being made to look at. The series of slides being shown internally at the company, which owns Baltimore Gas & Electric, is all about "understanding change" and how to deal with it.

As we know, "change" is coming to Constellation because it may be bought by Exelon Corp. of Chicago. As Hanah Cho reports, Exelon chief operating officer Chris Crane told insiders that Constellation will see the "most impactful" job cuts in the merger. (That means lots of Constellation people will be laid off in the worst economy in 70 years, if you need a translation.)

But Constellation, trying to seem sensitive and probably worried about productivity with the merger hanging over everybody's head, is foisting psychobabble on its servants. Among the slides:

"What is ending for you?" "How do you feel about what is going away?" "What excites you about the change?"

Potential reactions to change, another insightful slide says, are: "Impatience/flaring tempers," "Spreading rumors," "Complaining/blaming" and "Sarcastic comments."

Scandalous! But Constellation employees needn't succumb: "If you are experiencing these feeling and behaviors, what could you do to help yourself move forward?"

The answers, says Dr. Goodvibes, include: "Be tolerant of management mistakes," "Be realistic about the root cause of challenges" and "Adopt stress management techniques."

Feel better now?

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (3)
Categories: BGE/electricity
        

Baltimore Gas & Electric has sent everybody a letter apologizing for the screwups on Friday, July 22, when the grid required a mandatory activation of BGE's Peak Rewards program shutting down air-conditioners. The 70,000 households who had chosen "100 percent" cycling saw their AC shut off from 11:30 am until late that night in some cases. Few if any of the Peak Rewards participants expected their air to be off that long.

"We acknowledge that many of you experienced discomfort and frustration during this time, and some of you reported delays in getting your air conditioning service restored -- even after the transition back to normal operations was complete," BGE said in the letter. "We sincerely regret any inconvenience this may have caused."

The utility is reviewing Peak Rewards procedures with special focus on "program communications and call center delays." And it says, don't choose 75 percent cycling or 100 percent cycling if you have health problems. The 75-percent option, where during Peak Rewards events your AC runs only 25 percent of the normal time, "is not recommended for customers who have medical or health conditions, who are home for much of the day, or who otherwise found the temperature rise during the July 22 emergency event to be more than they can accommodate..."

Same basically goes for the 100 percent option, when your AC doesn't run at all, BGE said.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (11)
Categories: BGE/electricity
        

Brian Witte of the Associated Press notes that Exelon, which is trying to buy Baltimore's Constellation Energy, was the largest single donor in the first half of the year to the O'Malley-led Democratic Governors Association. Exelon spokeswoman Judy Rader says it's to support the DGA's energy symposiums.

Also:

GTECH Corp., which created Maryland's monitoring system for the state's slot machines, donated $100,000 to the DGA.

Exelon and Constellation have also hired O'Malley's brother in law, Max Curran, to push the deal through the Public Service Commission.

Posted by Jay Hancock at 8:50 AM | Permalink | Comments (6)
Categories: BGE/electricity
        

The latest from BGE. Last week BGE invoked the PeakRewards program, turning off thousands of households' air conditioners, after a mandatory trigger on such "demand response" programs was ordered by grid manager PJM Interconnection.

BALTIMORE, July 28, 2011 – Baltimore Gas and Electric Company (BGE) today announced that it is preparing for a return of extremely high temperatures throughout its Central Maryland service area tomorrow. The utility expects to have sufficient electric supply to meet anticipated demand, but encourages customers, as it does with approaching storms, to take the time now to prepare and consider ways to conserve energy. The utility also announced that it does not anticipate a need to activate its energy demand response program, PeakRewards, despite the extremely high temperatures forecasted for Friday.

However, the utility cautioned that unforeseen operating conditions could warrant activation of the program. BGE will monitor its electrical grid with an eye toward minimizing impacts on its customers.

Posted by Jay Hancock at 3:03 PM | Permalink | Comments (3)
Categories: BGE/electricity
        

Another thought on Peak Rewards, the Baltimore Gas & Electric program that shut off air conditioning for thousands of households on Friday. Whatever you say about BGE's marketing of the program and handling of Friday's cutoffs, it's hard to attribute the utility's behavior to the profit motive.

The partial or total shutdown of 350,000 air conditioners, via radio-controlled switches, deprived BGE of hundreds of thousands of dollars in direct revenue from customers. You don't pay for a kilowatt that you don't burn. True, BGE got paid handsomely by the grid for the shutdowns. When PJM Interconnection calls for mandatory delivery of "demand response" like Peak Rewards, utilities and other users get $1,000 for each megawatt hour of use they curtail. BGE households cut their use by 600 megawatts for six hours, which comes to $3.6 million for BGE. But all of that, says BGE (and I have heard nothing to contradict this), is rebated to customers in one way or another -- largely through the credits that Peak Rewards customers earn on their bills.

Whether or not having your AC cut off is worth the credits, on the other hand, is subject to some discussion.

Posted by Jay Hancock at 9:07 AM | Permalink | Comments (5)
Categories: BGE/electricity
        

Sun multimedia czar Steve Sullivan asks me questions and I answer. I gave BGE a grade of B-minus when he asked how they responded to Peak Rewards confusion. On further thought I think I'd switch it to a C or a C-minus. BGE did put out an announcement telling people what was likely to happen fairly early on Friday. However few people got it, and BGE's subsequent communications were confusing. Also the phone lines were jammed.

Posted by Jay Hancock at 1:54 PM | Permalink | Comments (1)
Categories: BGE/electricity
        

The Maryland Public Service Commission, which regulates Baltimore Gas & Electric, said it received "less than one dozen calls" on Friday related to BGE's Peak Rewards program, which shut off 72,000 household's air conditioners for most of one of the hottest days in memory. "Additional complaints were received over the weekend that are being reviewed," the PSC said.

As readers of The Sun know, the shortage of complaints received by the PSC hardly means customers are thrilled with Peak Rewards. Perhaps one reason is the difficulty for people to communicate with the commission online. There seems to be no general PSC email address. There is place on the Web site to "file a complaint." But this seems to be a service for resolving bilateral disputes between utilities and customers, not a place to opine on general regulatory policy and BGE conduct.

Reader Ren has a good suggestion:

It has been noted that the commission has received only a "handful" of complaints. Does that mean that they won't count all those who wrote directly to you or The Sun?

Can you let us all know an email to use that will get more than that handful of thoughts to them?

Terry Romine is the Maryland Public Service Commission's executive secretary, the recipient of all official correspondence. Her email: tromine@psc.state.md.us. Or you can call the PSC: (410) 767-8000.

UPDATE: PSC spokeswoman Regina Davis suggests calling PSC external relations at 888-309-7325. And she says to go ahead and use the formal complaint system for comments on Peak Rewards.

Posted by Jay Hancock at 8:53 AM | Permalink | Comments (10)
Categories: BGE/electricity
        

As noted, many BGE customers were without air conditioning for hours on Friday because they had signed up for the 100 percent "Peak Rewards" option. That gave them bill credits in return for BGE's right to turn off their air conditioning compressor during periods of high demand. While customers who signed up for 100 percent knew that their AC would be off the entire hour for each hour of a cycling "event," few knew that an "event" could last six hours more more.

But I got far fewer complaints from BGE customers who had the 50 percent option, which ran their AC for half its normal use rather than not at all. This way it came on for 20 or 30 minutes each hour. We have the 50 percent deal at the Hancock house. The credits are lower, but at least the AC runs at least part time. My family said they barely noticed the difference. Here's commenter Kimberly:

Answer - lower it from 100% to 50%. I just lowered ours from 100% to 50% cycling. We will try that and see what happens. If Friday repeats we will opt out. At 100% cycling , our AC was off for 8-9 hours on Friday. I never thought they would cycle it that long. I thought they did 20 minute intervals. That's only if you are at 50% cycling. They really screwed up and should give money back (more than the peak rewards credit) to those they did this to. I don't think anyone who signed up for the program ever thought they cycle for so many hours straight completely off and get the houses up to 90 degrees. I just found out that at 50% it will come on then off for a while during the emergency cycling.

Posted by Jay Hancock at 10:23 AM | Permalink | Comments (60)
Categories: BGE/electricity
        

BGE put out a confusing statement Friday night about its air conditioning shutoff program "being phased down to a lower level of activation, effective immediately." Many took this to mean that the "100 percent" option in BGE's Peak Rewards program, which lets the utility shut off your AC for the entire duration of an emergency, high-demand "event," would be canceled or at least suspended for a while.

In fact, the lower activation was in effect only for a few hours last night. It's back to business as usual at Peak Rewards. "Absent some unforeseen emergency event, we have no plans to activate Peak Rewards through next week," says BGE spokesman Rob Gould. But the next time a demand spike on a super hot day triggers an emergency, people who signed up for the "100 percent" Peak Rewards option could have another experience like the one on Friday, in which thousands of households went without AC for more than six hours on one of the hottest days in recorded history.

Bottom line: BGE has some explaining to do, and I'll be following up in Tuesday's column. "Customers did not expect to have a cycling event that went as long as it did," said Gould. "People have been getting a lot of money for this," he said, referring to the bill credits that Peak Rewards customers receive. "We just need to do a better job of keeping them informed."

Well, they're informed now. People who signed up for 100 percent just found out that on really really hot days they can basically lose their air conditioning all day long. (I'm a 50 percent Peak Rewards customer. The temperature at our house rose a few degrees Friday but it was barely noticeable.) I doubt that will help the program's popularity.

Turns out there were two BGE "cycling events" yesterday, which alert blog commenters had figured out from their Web readouts but which BGE didn't explain very well. The first one, which was mandated by the PJM grid, went from 11:30 to like 5:40. Then BGE immediately started another one that went well into the evening. For the first event, BGE says, Peak Rewards members got what they signed up for. 100 percenters had their AC turned off completely. 75 percenters had it turned off for 3/4 of the time it normally would have run. 50 percenters had their compressors running half the time. (There are 350,000 BGE customers with Peak Rewards cutoff switches on their AC. Of those, 72,000 signed up for 100 percent "cycling," which gives you the biggest credits on your bill.)

But for the second event, BGE cycled everybody at 50 percent. So according to BGE, even people who had signed up for 100 percent would have had their AC turned back on half-time after 6 pm or so. That wasn't what many blog commenters said they experienced. Some people said they were flat-out without air until 9 p.m.

For what it's worth, Gould says he's a 100 percent Peak Rewards customer. "I was off all day," he says. During the second "event" in the evening, he said, his compressor started running again at 50 percent. It got up to 91 degrees upstairs in his house, he said, and 85 degrees on the first floor.

Posted by Jay Hancock at 1:35 PM | Permalink | Comments (42)
Categories: BGE/electricity
        

UPDATE, 10:45 p.m. Commenter Guitarmom says:

After a sweltering day in which 72,000 BGE customers had their air conditioning turned off for multiple hours thanks to their participation in BGE's "Peak Rewards" program, BGE seems to have decided that the energy-saving program at its most intense was not a good idea. On a day when the temperature at BWI was 104 degrees, everybody who signed up for the "100 percent cycling" option in Peak Rewards had their AC shut off at 11:30 a.m. and didn't have it turned on again, BGE says, until "approximately 5:40 p.m." Well after that time many blog commenters were saying they still didn't have air conditioning.

When you sign up for Peak Rewards BGE puts a switch on your AC compressor. You get bill credits based on whether you sign up for 100 percent, 75 percent of 50 percent cycling. During the peak use "event" you agree that BGE can shut off the AC in those proportions to save energy. (Sign up for 50 percent and the AC supposedly runs half as much as normal.) But I doubt the people who signed up for 100 percent expected the "event" to last all day.

Now BGE has backed down, saying in a press release:

Baltimore Gas and Electric Company Transitioning Immediately to a Lower Level of PeakRewardsSM Program Activation During the transition period, all customers who voluntarily enrolled in the program are cycled at the reduced 50 percent level

The Public Service Commission has been getting complaints today about Peak Rewards. And I assume BGE got deluged with calls. My blog post on the shutoff has 140 comments and counting. Many Peak Rewards customers say they knew BGE could cut off their cool, but they didn't expect it to go on for five or six hours or more.

The uproar could give BGE political headaches in the attempt by parent Constellation Energy to complete its merger with Exelon. And it's probably going to make a lot of people more spooked by the computerized "smart" meters BGE is getting ready to install, whose purpose is also largely energy savings.

I don't see the statement on their Web site. So the whole BGE press release is below the fold.

Continue reading "BGE flipflops, says it won't again shut AC completely " »

Posted by Jay Hancock at 7:30 PM | Permalink | Comments (78)
Categories: BGE/electricity
        

UPDATE: 7:45 p.m. Here's commenter Tom:

UPDATE: 5 p.m. It is now "late afternoon." Let us know when your units come back on, you 100 percenters.

I'm all for BGE's Peak Rewards program in principle. It's a great way to incentivize people to cut their expensive energy use on days like today. I'm a Peak Rewards participant at the "50 percent" level. The program lets BGE turn off your air conditioner for a time on really hot days. About 450,000 BGE customers participate in Peak Rewards, BGE says.

But today's implementation of Peak Rewards may catch some participants off guard. BGE announced that folks who signed up for the "100 percent" Peak Rewards deal will have their AC turned off from 11:30 this morning "until at least late afternoon."

UPDATE: BGE spokeswoman Linda Foy says 350,000 of the 450,000 Peak Rewards members agreed to have their AC switched off. (The others have switches on their water heaters, not their air conditioners.) Of those, she says, 72,000 chose 100 percent cycling.

This if from BGE's announcement:

Those on the air conditioning program will have their units’ compressors cycled at the level in which they enrolled, 50, 75 or 100 percent . Those who selected 100 percent cycling for the maximum bill credits will have their compressors off for the entire extreme event. This event began at approximately 11:30 this morning and is expected to continue until at least late afternoon.

That doesn't sound very safe. I know the idea is that people who signed up for 100 percent cycling would typically be those who leave their home empty during the day. But odds are that some of the houses with AC being shut off at 100 percent have people in them.

Here is how BGE describes the cycling on its Web site:

Cycling: Cycling refers to the amount of time each hour that your air conditioning (A/C) compressor is switched off and on during a PeakRewards℠ event. For example:

If your Compressor normally runs for 40 minutes (two 20-minute periods) each hour and you sign up for 50% Cycling, your Compressor would only run for 20 minutes (two 10-minute periods) during each hour of the event.

If your Compressor normally runs for 40 minutes (two 20-minute periods) each hour and you sign up for 75% Cycling, your Compressor would only run for 10 minutes (two 5-minute periods) during each hour of the event.

If your Compressor normally runs for 40 minutes (two 20-minute periods) each hour and you sign up for 100% Cycling, your Compressor would not run at all during the event.

I bet there are folks out there who did not expect an "event" to last five hours or more.

UPDATE: I asked Foy whether BGE believes some of its customers were prepared for a cycling event of multiple hours. Her response:

Peak Rewards is a voluntary program and is clearly explained to customers before and after enrollment. Also keep in mind, participating customers are receiving bill credits of up to $200 in the first year of participation and up to $100 dollars every year thereafter – regardless of whether the program is activated. Also remember, even when the program is activated, the a/c fan will still run and customers can use ceiling fans and other means to stay comfortable. Customers with concerns about the program can certainly call us.

Posted by Jay Hancock at 1:35 PM | Permalink | Comments (224)
Categories: BGE/electricity
        

The Maryland Office of People's Counsel, which represents consumers in utility matters, has protested before federal regulators against Exelon's proposed buyout of Constellation Energy. The deal would give the combined companies too much concentrated ownership on the PJM grid that serves much of the mid-Atlantic coast, including Maryland, according to an expert hired by OPC, potentially giving them the ability to raise prices and boost profits.

Exelon and Constellation already realize that an unmodified merger would give federal antitrust authorities reason to oppose it. So their deal includes divestiture of three Maryland generation plants formerly owned by BGE. (C.V. C.P. Crane, Brandon Shores, H.A. CraneWagner.) That's not good enough, says the study commissioned by OPC and the Pennsylvania Office of Consumer Advocate. Even with those divestitures, the combined Exelon-Constellation would have too much power over wholesale electricity markets. Here's the gist:

[The meger] could leave a dominant firm in the generation market (with market share on the order of 20 percent, post-mitigation) and would not address Applicants’ ability to profitably raise electricity market prices. Since all generating units selected for dispatch in PJM receive the market clearing price, the units that can set the price are important. If market prices can be manipulated—by strategic bidding, retirements, withholding, or other means—the Applicants would be in a position to affect prices and collect higher infra-marginal revenues.

Posted by Jay Hancock at 11:14 AM | Permalink | Comments (3)
Categories: BGE/electricity
        

Doubt it. But it's good to see that the Public Service Commission dinged North American Power for telling blatant falsehoods about how much money BGE customers could save by switching from BGE's standard power package to North American's. A woman from North American who called me at home a few months ago said I could save up to 20 percent when the savings were nothing of the kind. Here's the column I wrote about it.

North American got fined $100,000, which is a decent hit for the small but rapidly growing outfit. Here is Hanah Cho's story on the fine. From the PSC's news release:

In response to a Complaint filed by Commission Staff, and after evidentiary hearings, the Commission found that: (1) four deceptive statements were contained in placemat advertisements marketing NAP services, which were placed at certain diners by four NAP representatives (e.g., claiming that there is “no contract to sign” and that “customers can ‘save up to 20%’”); (2) NAP falsely stated in its Terms and Conditions that they had been approved by the Commission; and (3) NAP failed to provide a complete and accurate price description in its Terms and Conditions, along with the Commission’s toll-free number and Internet address for complaints, as required.

Here is the statement put out by the company:

"We are so pleased to have resolved this issue to the satisfaction of the Commission and to our internal standards of doing business. While the fine is significant, we are grateful to the PSC Staff for bringing our attention to these matters and for acknowledging that this was not intentional-it was the result of an early stage company experiencing rapid growth. This process has caused us to re-examine our practices and hire some of the best compliance and energy experts in the business - we are a better company because of it."

They're probably not THAT grateful. Now let's see if they and others can clean up their act. When BGE's expensive electricity-supply agreements finally disappear in October and BGE's standard price falls again, the third-party marketers will have a hard time delivering any savings. That would pressure salesfolks to enhance reality again.

Posted by Jay Hancock at 9:03 PM | Permalink | Comments (0)
Categories: BGE/electricity
        

So I'm eating dinner at about 8:00 last night, going through the mail. There's a cardboard flyer from BGE Home for standby electric generators. "When the lights go out... You won't have to!"
"Be prepared to handle any power outage with a standby generator from BGE HOME."

On cue, thunder rolls and the lights start flickering. Fortunately we kept our power, but more than 50,000 other area households didn't. Of course the power is delivered by BGE, which, as the companies keep taking pains to point out, is not the same company as BGE Home. (But if they were that worried about people mistaking one for the other they could change BGE Home's name.) BGE Home is an unregulated company owned by Constellation Energy, which is also BGE's parent. BGE Home is in the electric/gas appliance and maintenance biz.

But they're both owned by the same parent. Could the repeated BGE outages be an evil plot to spur generator sales from BGE Home? Not really. The BGE outages occur because the company hasn't hardened its system enough to withstand storms. The money it saves from not burying lines etc. is a lot more than anything from generator sales. (I'm not saying they need to get to zero outages, but BGE's and Pepco's records the past two years have been pretty poor.)

This morning, waiting to go on WBAL with Bill Vanko, I heard a backup generator commercial from some other company.

Posted by Jay Hancock at 9:04 AM | Permalink | Comments (11)
Categories: BGE/electricity
        

Here's Rich Walker, BGE's director of IT transformation, talking to Intelligent Utility. Obviously installing more than 1 million smart meters won't be a cakewalk, but Walker is a bit more candid in this interview than I would have expected.

As I've said, smart meters aren't the evil instruments of Big Brother that many believe them to be. Nevertheless, BGE customers to some degree will be experiment subjects for smart meters. The "lessons learned" that BGE will take away from the installation and teach to other utilities will be learned to a large degree at the risk of the BGE customer. HT Carol for the link.

Of the near-simultaneous implementation of multiple new systems, Walker said: "I wouldn't recommend this for the faint of heart." Intelligent Utililty:

BG&E has begun its ambitious implementation schedule, partially driven by the requirements of its federal grant, which accelerates this fall and is scheduled to end in 2014.

Among the lessons learned, Walker said, many will resonate with other utilities. Those lessons involved complexity, integration, resources and organizational change.

"You cannot underestimate the complexity of replacing the heart of your utility systems," Walker said. "If you're approaching the replacement of three systems, you need to closely consider your timeline and budget."

The integration challenge can be tackled in-house, but you'll need "a small army," Walker said. Better to see what options the market can offer.

Resources and expertise in the marketplace "go hand in hand," Walker said. "There aren't that many experts in the marketplace who can do this work, so you need to form alliances with your integrator and vendor."

Posted by Jay Hancock at 11:26 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

Let us remember that Mayo Shattuck does not own Constellation Energy. Neither does the board of directors. They work for the shareholders, many of whom live in Baltimore. Shattuck and the board direct the affairs of the company in strict and solemn trust for the owners, who by nature of their numbers and diversity cannot exert control themselves.

And the owners have just expressed deep displeasure with their fiduciaries and employees. Constellation badly flunked the "say on pay" test that most companies must take starting this year. More than 60 percent voted down Constellation's pay scheme, which nets Shattuck $10 million a year or so plus an enormous pension that he'll cash in a lump some when he leaves the company.

If you believe in property rights, which are the soul of capitalism, you have to hope this is a major embarrassment for the company. It's the equivalent of a really poor employee performance review.

Posted by Jay Hancock at 6:46 PM | Permalink | Comments (7)
Categories: BGE/electricity
        

Sunday's column was about Baltimore's desire to save money and conserve energy by installing light-emitting diodes in its streetlamps and what looks like Baltimore Gas & Electric's attempt to block it on spurious grounds of safety. The column quoted Jamie Kendrick, the city's deputy director of transportation, as saying the city pays BGE $20 million a year total for streetlights and $12 million for maintenance.

The city wants to cut maintenance costs by changing its own bulbs -- needed far less often with LEDs -- and doing other routine maintenance. BGE says that that's too dangerous and that only BGE can do the work unless the city puts in expensive circuit breakers that Baltimore says are a dealbreaker.

BGE disputes the city's cost figures but didn't get back to me on them until after the column was published. Here's part of the reponse from BGE senior vice president Jeannette Mills (I'll publish the whole thing after the jump):

Published reports indicate the city pays BGE $20 million annually for streetlights, of which $12 million is in maintenance fees. This is absolutely incorrect. The City’s total annual BGE bill for streetlights is half that number, and only includes $1.4 in maintenance costs for those 43,000 streetlights.

No way, says the city, although now it says the $20 million annual streetlight bill includes money paid to Pepco, not BGE. But it says it stands by the $12 million paid to BGE for streetlight maintenance, which "includes on-demand maintenance, inspection, cleaning, renewal fees and $6.6 million in equipment rental fees," according to a prepared statement from DOT spokeswoman Adrienne Barnes. "This equipment rental fee, which according to the tariff primarily pays for the maintenance of BGE owned fixtures."

Part of this is an argument about defining maintenance. Equipment leasing isn't maintenance, says BGE spokesman Rob Gould, and he's right. Part of the argument may be about whether you're talking about costs for all 70,000 of the city's streetlights or just the 43,000 that the city owns. City officials talk about eventually installing LEDs in all 70,000 lights, even the ones owned by BGE.

In any case the larger question remains: How come BGE won't let Baltimore maintain its own streetlights without the expensive circuit breakers when other cities are already doing it?

Here is the response from BGE's Jeannette Mills:

In response to your column of May 22, BGE would like to set the record straight. BGE is committed to helping all of our customers — large and small — reduce energy usage and lower their energy bills. In fact, BGE has been a steadfast partner with the City of Baltimore in helping it and its citizens accomplish both. More recently, BGE has been working with the City and the Maryland Public Service Commission (PSC) to identify ways the City can reduce its energy bill

Continue reading "BGE: Baltimore City exaggerated our bills" »

Posted by Jay Hancock at 6:02 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

Sunday's column was about what looks like an attempt by Baltimore Gas & Electric to impede on a pretense Baltimore's plan to install street lamps powered by light-emitting diodes, which would involve lots of energy savings and also the loss of maintenance revenue for BGE. For the project to work the city says it has to change the new lightbulbs itself.

For that to happen BGE insists on installing "upstream" circuit breakers for safety reasons. Otherwise city maintenance workers would be at risk, it says. The city says that's "impractical" and would make the plan pointless. And the city has a great argument: Bowie has been changing its (conventional) street lamps for years with its own workers in just the way that Baltimore wants to do with ITS workers. With no problems.

Below is the letter from Bowie Public Works Director James Henrikson to the PSC. He calls the upstream disconnects "redundant" and "unnecessary." BGE made Bowie put them in. But Bowie doesn't use them for changing bulbs.

Posted by Jay Hancock at 8:52 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

There are reasons to go slow on smart, computerized meters. But suggestions that they cause heart attacks or cancer or will read your mind are not among them. The more the smart-meter opposition resembles the anti-fluoride paranoids of the 1960s or whenever, the less credible it becomes. From comments:

I spoke with a previously healthy 30-something man this weekend who has developed heart attack symptoms 3X (3 costly ER trips) from the smart meter on his home. When the smart meter was removed, these ceased. However, now the neighbors' meters are bothering him and he is having to flee his home and try to find a place with no smart meters. Is this America or the old Soviet Union or Nazi Germany?

Posted by Jay Hancock at 12:52 PM | Permalink | Comments (9)
Categories: BGE/electricity
        

From the NYT:

The plant’s owner, the Exelon Corporation, had long known that corrosion was thinning most of these pipes. But rather than fix them, it repeatedly lowered the minimum thickness it deemed safe. By the time the pipe broke, Exelon had declared that pipe walls just three-hundredths of an inch thick — less than one-tenth the original minimum thickness — would be good enough.

Though no radioactive material was released, safety experts say that if enough pipes had ruptured during a reactor accident, the result could easily have been a nuclear catastrophe at a plant just 100 miles west of Chicago.

Exelon has agreed to buy Constellation Energy, BGE and the nuclear reactors at Calvert Cliffs.

Posted by Jay Hancock at 10:14 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Maryland is pressing ahead with smart, computerized meters. It would have been better if we had held back and let others make the mistakes that happen for all early adopters. It seems that hundreds of PG&E's smart meters in California got roasted by the heat and calculated that customers used more electricity than they really did.

This from the ABC TV station in San Francisco:

SAN FRANCISCO (KGO) -- PG&E will issue some customers refunds after the utility discovered a rare SmartMeter defect.

The meters, supplied by Landis+Gyr, occasionally run fast when experiencing a narrow band of high temperatures, resulting in a miscalculation of energy bills. The error affects fewer than 1,600 of the two million meters Landis+Gyr supplied to PG&E.

The meters will be replaced at no cost to customers. The utility will issue full refunds to customers who received inaccurate bills. The average refund will be about $40 per customer. PG&E will also issue a $25 credit for customer inconvenience and offer a free in-home energy audit to affected customers.

Posted by Jay Hancock at 6:04 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

When Black & Decker's Nolan Archibald agreed to sell the company in 2009 and become executive chairman of the combined Stanley Black & Decker, he had already negotiated the terms of his new employment in fabulous detail. Archibald will make dozens of millions of dollars in "cost synergy bonus" depending on how well and how much he cuts costs at the merged company. The Archibald deal was agreed to and announced at the same time as the merger itself.

Constellation Energy's Mayo Shattuck is making a similar move in that company's buyout by Exelon Corp. He'll become executive chairman of the combined company, according to the announcement, keeping his family in Maryland but traveling a lot to Exelon's headquarters in Chicago. As we reported, Shattuck isn't getting any change-of-control loot from the Exelon merger beyond accelerations of options and so forth -- about $20 million.

So what deal did he negotiate with Exelon? What's he going to make in his new position? Why didn't they announce his terms as Black & Decker did with Archibald in the Stanley buyout?
Because he hasn't negotiated them yet, the company says.

Shattuck's "post-merger compensation has not yet been established and is not part of the merger agreement," Constellation spokesman Larry McDonnell said in response to my query.

My take: There are two possible reasons for Shattuck not to have nailed down the terms of his new job. 1) It might incite negative public opinion as the companies try to get approval for the merger. 2) Shattuck may already be thinking about moving on, perhaps to Wall Street. If the merger goes through next year, I wouldn't expect him to stick around very long at Exelon.

Posted by Jay Hancock at 5:05 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

Recently I wondered out loud how indepedent electricity marketers such as Washington Gas Energy Services would attract customers now that BGE has just about used up all the expensive electricity it bought before energy prices crashed. While BGE was locked in with the old prices it was easy for third parties to undercut it. That's why tens of thousands of households have switched to independent suppliers. You could save $10 or $15 a month depending on your use.

Now, however, it may be more difficult for the independents to beat BGE's standard price, which will be below 9 cents in the fall. WGES's "Get Green For Free" promotion, which ends May 6, is one way to market a product not strictly based on price. If you pay for half your power to be generated by wind (based on WGES buying energy credits from wind farms), WGES says it'll throw in the other 50 percent for free, so you'll be 100 percent wind. It's part price promotion, part ecology.

So based on this promotion the one-year, 100-percent wind deal from WGES is 9.9 cents per kilowatt hour. The same deal from Constellation Electric, according the the always indispensible Office of People's Counsel price comparison chart, is 10.39 cents/kwh.

Posted by Jay Hancock at 5:54 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

11:00: Analyst: Are there change in control agreements furnishing merger bonsues to Constellation execs? Shattuck: There are no change in control agreements and no employment contracts.

10:50: Analyst: Who will be in charge of the combined company? Shattuck will be "executive chairman" and Chris Crane will be CEO. Who's the boss?
Shattuck: "I can answer that. Chris is in charge. He's the CEO, and I'm going to help him any way I can."

10:47: Several questions about Constellation's joint nuclear venture with the French EDF Group. Execs said several times there are no plans to change that.

10:43: Rowe: "We think long-run value lies in being greener and cleaner."
Shattuck: "More diversification among the regulated territories is nice... I think that's a plus for us." -- referring to the combined company having regulated utilities in Illinois and Pennsylvania, not just BGE in Maryland.
Shattuck: "Each of us coveted what the other had" -- Constellation was trying to add generation, Exelon was interested in Constellation's energy marketing.

10:35: Analysts are concerned about whether the Maryland PSC will approve the deal, given how it dragged its feet on Shattuck's attempt to merge with FPL in 2006. Analyst says to Shattuck: "The history there, particularly for your company, has been a challenged one."
Shattuck responds by saying it's a different environment, with a stable commission and falling BGE prices, in contrast to the spike in BGE prices in 2006.

Shattuck: "We have had now a sitting commission for five years. Across the board we felt like they have dealt with these cases to the letter of the law. Six years ago the status of that commission was less stable. We're also dealing with an environment that is substanatially different," not least because BGE prices are going down.
Shattuck says he thinks the package of benefits, including the $100 BGE rebate, will be attractive to Maryland officials.
In Maryland, he said, "they care about renewables. They care about efficiency projects. They care about electric vehicle infrastructure" and programs for low-income customers. "The combination of these things is meant to respond to five years worth of observations here, and I think what we've done is hopefully doing to be well received."

10:23: Chris Crane, Exelon president: Corporate consolidation will lead to an annual reduction in costs of $260 million per year.

10:18: Shattuck: To satisfy the antitrust cops, the companies expect to have to sell off 2,600 megawatts worth of generation plants within the PJM, midatlantic grid.

10:15: Constellation Chairman & CEO Shattuck:
Refers to "the benefits of this transaction to Constellation shareholders and to Maryland."
Shattuck: "We are maintining a significant employee and headquarters presence here in Baltimore."
For BGE employees: "No involuntary merger related job reductions" within two years after deal closes.

10:10: Rowe: "We believe the transaction can be executed. We expect to close in early 2012."

10:08: John Rowe, Exelon CEO and Chairman, belabors the benefits for Exelon shareholders. "The combination gives us the scope and scale we want.... It's not just about bigger. It's about a sustainable platform for smarter growth." Reduces collateral requirements for both companies moreso than either company could do on its own.

Rowe is quick to bat down speculation that the Constellation acquisition will revive the Calvert Cliffs 3 nuclear reactor project that Constellation abandoned last year.

"That is simply not the case," he says. "At today's gas prices you can't build a new nuclear plant in a competitive marketplace." (Cheap natural gas, he's saying, makes new nuclear uncomptitive.)

9:55: They're not letting reporters ask questions: "Media representatives are invited to participate on a listen-only basis."

Posted by Jay Hancock at 9:54 AM | Permalink | Comments (9)
Categories: BGE/electricity
        

Constellation's board is selling one of Maryland's heritage companies to Chicago-based Exelon, so it is quite sensitive about trying to show how this is a great development for Baltimore. It's not a great development for Baltimore. However the merger announcement includes several paragraphs on purported upsides for Maryland, including a $100 rebate for each residential BGE customer.

The combined company would commit to $10 million in charitable giving in Maryland for a decade after the merger. It would spend $50 million to build 25 megawatts of renewable electricity generation in the state and $10 million on developing Maryland electric-vehicle infrastructure. The news release says "the growth engine of the combined company will be headquartered in Baltimore," meaning Exelon's power marketing division will be combined with Constellation's and based here, and the companies' renewable energy operation will be based here. And: "To house the expanded Baltimore commercial and renewable energy headquarters, the new company intends to build or substantially renovate a state-of-the-art Leadership in Energy and Environmental Design (LEED) office center in Baltimore."

Total benefits for Maryland, the companies claim, are $250 million. Despite all the talk about growth, however, Constellation may end up having fewer employees in Baltimore. Mergers like this make money for shareholders through efficiencies, and efficiencies usually include layoffs.

The Maryland Public Service Commission will almost certainly seek more than $100 from this for each BGE customer. And it's not at all clear that this deal, like previous Constellation or BGE combinations, won't founder on the shoals of PSC demands.

The bigwigs are having a conference all at 10, which I'll be liveblogging.

Posted by Jay Hancock at 8:06 AM | Permalink | Comments (12)
Categories: BGE/electricity
        

Mayo Shattuck was an investment banker before he was an electricity executive. I always figured he would sell Constellation Energy, parent of Baltimore Gas & Electric, before he was through with it. In 2006 he was trying to seal a deal to sell Constellation to Florida-based FPL Group, but it petered out amid that year's brouhaha over BGE's 72 percent rate increase.

Now he may be at it again. There is been building speculation in recent weeks that Constellation, whose stock price had lagged since its near-bankruptcy during the 2008 financial crisis, would seek a deal with another big energy company. Several news outlets are reporting tonight that the company is close to an agreement with Chicago-based Exelon. This from Bloomberg:

Exelon Corp. (EXC) is near an agreement to buy Constellation Energy Group Inc. (CEG) in a stock deal that values the company at about $7.7 billion, according to a person with knowledge of the matter.

The offer values Constellation at more than $38.50 a share based on Exelon’s closing stock price today, said the person, who declined to be identified because the talks are private.

In the plan under discussion, Constellation Chief Executive Officer Mayo Shattuck would become chairman of the combined company, and Chris Crane, currently the president of Exelon, would become chief executive officer, succeeding Rowe, the person said. The talks started last year, the person said.

Constellation is by far the largest Baltimore-based company, an outgrowth of BGE, which was the nation's first natural-gas utility in the 1800s. Unclear what exactly this deal might mean for Constellation and its Baltimore workforce, but it's probably not good. However much of the company's employment is tied to BGE, the local utility, and can't be moved or downsized.

UPDATE: Here's a March 14 column: Stock price may push Shattuck to sell Constellation

Posted by Jay Hancock at 8:49 PM | Permalink | Comments (10)
Categories: BGE/electricity
        

Baltimore Gas & Electric is in the process of locking up the remainder of its juice for the fall, winter and spring. But the company has already bought most of the power and pretty much knows what it will cost. Mark Case, BGE's senior vice president for strategy and regulation, told me last week that the default BGE price (what you get if you don't switch to a different electricity supplier) will dip substantially starting Oct. 1.

BGE's standard price now until the end of May for power and transmission is 10.229 cents per kilowatt-hour. (You pay extra on top of that for BGE to deliver the electricity to your house.) Starting June 1 it'll be 9.960 cents. And after Oct. 1, says Case, "I think we'll see 9 cents or lower."

That would be the lowest price for BGE's standard offer since early 2006, before price caps associated with deregulation were removed. Compared with the present price it would save a typical household (1,000 kwh/month) more than $100 a year.

For alternatives to BGE's default fare, prices are already below 9 cents. As always check the Office of People's Counsel's Web site for a list of current deals and terms. Castlebridge Energy, for example, is offering one- and two-year deals for 8.95 cents. It may be more difficult for alternative suppliers to beat BGE's standard price after October. The period of declining electricity prices that began with the financial crisis may be coming to an end.

Posted by Jay Hancock at 6:08 AM | Permalink | Comments (11)
Categories: BGE/electricity
        

The Obama administration may eventually get something done about greenhouse gases via the Environmental Protection Agency or, if there is a second Obama term, Congress.

Meanwhile however it is fighting an ongoing attempt to allow states and activists to sue the likes of Constellation Energy and Exelon to reduce their CO2 output. Arguments are today at the Supreme Court. The case is American Electric Power Co. v. Connecticut. Constellation and Exelon are not parties but they would be affected if the high court were to allow such suits.

From the Christian Science Monitor:

Fed up with the slow pace of government efforts to address global warming, a group of conservationists and state attorneys general filed lawsuits in 2004 asking a federal judge to order five major US power companies to cap and then reduce their emissions of carbon dioxide.

Seven years later, the case arrives at the US Supreme Court, where the justices must decide whether concerned citizens and state officials have the legal power to force suspected polluters to cut their alleged level of pollution – though the federal government itself has not yet taken action on carbon emissions.

Posted by Jay Hancock at 9:00 AM | Permalink | Comments (3)
Categories: BGE/electricity
        

A reader who locked in with Constellation Electric a year ago at 9.7 cents kwh is being offered a one-year renewal at 9.49 cents per kilowatt hour. He called and told them he could get a deal from Castlebridge Energy for only 8.95 cents.

He says they agreed to lower the Constellation Electric price to 8.9 cents flat. The lesson: If you have a third-party electricity provider and it comes time for a contract rollover, always shop around. And Constellation Electric, at least, seems willing to negotiate.

Here are the reader's comments. You may also empathize with his feelings on having to shop and negotiate for everything these days.

I called Constellation and told them I wanted to terminate as of the end of my current contract. Of course they asked why, and I told them I had been offered a better deal from Castlebridge, which was listed at 8.95 cents on their web site as you indicated. But Constellation passed me on to a representative in their contracts department, who offered me 8.9 cents for one year if I would stay with them. I accepted, as it seemed the logical thing to do at that moment. You know, Jay, it really is not my preference that so many goods and services are now negotiated this way, like buying a car. I have done a similar thing several times now with Comcast for my TV and internet service, as many others have. It is a pain.

Posted by Jay Hancock at 10:37 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

BGE told WBAL it changed how it notifies late-paying customers about security-deposit requirements. When you miss a few bills BGE can seek a deposit, which seems kind of perverse. As a credit-risk tool I wonder how effective it is. Seems like the time to seek a security deposit is when the customer is solvent, not when s/he's already missing payments.

BGE told WBAL it used to notify customers about the deposits by phone and bill messages, not by separate letters. Seems at least like the new method is getting people's attention. WBAL:

Harriet Sellman said she recently received a letter from BGE that made her angry and sick, saying she isn't sure how she is going to pay the extra money the company is asking for in the form of a security deposit.

"They decided we needed to pay a $532 security deposit which they estimate is two months of our estimated service costs," Sellman said. "I have been late. We're trying very hard to make do on one paycheck right now."

Posted by Jay Hancock at 11:12 AM | Permalink | Comments (23)
Categories: BGE/electricity
        

Can't find any news organizations reporting this online, but industry types tell me the Federal Energy Regulatory Commission has answered an emergency cri de coeur from Constellation Energy and other big power companies to raise the minimum offer price for generation capacity. It's complicated, but the upshot is that it will help keep your electric costs higher than they otherwise would have been. Here is the FERC decison.

UPDATE: Here's an account from Energy Choice Matters, with a good headline: FERC Orders Retail Customers in PJM to Pay $3 Billion More for Capacity

From a column a few weeks ago:

So you might wonder why two weeks ago power companies such as BGE parent Constellation Energy frantically urged Washington to slap price controls on electricity.

The answer is obvious only if you've been following the industry. Traditional controls, decreed by governments to try to protect consumers, keep prices low.

Electricity companies want regulators to keep prices high! Genius, from Constellation's point of view.

But these price controls are just as poisonous as the other kind. They'll block construction of badly needed power plants while forcing consumers to continue to pay billions of dollars extra for electricity.

Basically FERC just said "yes" to price controls to keep prices high.

Posted by Jay Hancock at 1:06 PM | Permalink | Comments (5)
Categories: BGE/electricity
        

The other day I posted objections to the offshore wind project from Sen. E.J. Pipkin. He wonders, among other things, why it doesn't have a requirement to put the windmills in Maryland waters, why the components aren't required to be made here etc.

Here's a response from the Chesapeake Climate Action Network. Communications Director Jamie Nolan says the response was put together with a coaltion of environmental and labor groups. I believe they are correct on cost overruns -- No. 6. However I assume developers will build lots of (internalized) overrun risk into their bids.

Responses to Senator Pipkin’s questions. Pipkin's questions are in bold. CCAN Response in lightface.

1. There is no requirement that the wind farm be located in Maryland.

Any project that would qualify under this bill would not be "in" Maryland or any state. It would be 10 miles offshore in federal waters, in a federally designated "Wind Energy Area". The two Wind Energy Areas that are close to Delmarva Peninsula load centers are referred to as the "Maryland" and "Delaware" areas, but these aren't official maritime boundaries. They are two parcels of federal waters, leased by DOI, separated by a shipping channel. Development of an offshore wind farm on either side of this shipping channel would result in similar jobs, environmental, health and rate stability benefits for Marylanders.

Maryland needs additional power on the Delmarva Peninsula, so this bill requires that an offshore wind farm reduce transmission congestion and increase reliability in this area. It's unrealistic to think that an offshore wind farm can achieve this far from major load centers like Ocean City and Salisbury because in this type of PPA, the developer has to cover the transmission costs. Any developer who entered a bid like this would be almost certainly disqualified because they would not be priced "comparable to other offshore wind projects.”

2. There is no requirement that the transmission lines from the wind farm come into Maryland.

Under this bill, an offshore wind farm has to reduce transmission congestion and increase reliability on the Delmarva Peninsula. The market and what interconnection point offered the

Continue reading "Environmentalists reply to Pipkin on offshore wind " »

Posted by Jay Hancock at 1:49 PM | Permalink | Comments (1)
Categories: BGE/electricity
        

Pipkin's office put out a list of what he calls "flaws with the proposal." The gloss on No. 1 is that there is no assurance that much of the electricity generated by the wind farm would be used by Marylanders even if the wind farm is located here. As for No. 5, perhaps the larger problem is that the $2 cap is $2 above what conventional power would cost -- a value that will very much depend on how the PSC projects the cost of conventional power.

1. There is no requirement that the wind farm be located in Maryland.
2. There is no requirement that the transmission lines from the wind farm come into Maryland.
3. There is no requirement that any of the components used in building the wind farm must be manufactured in Maryland.
4. There is no requirement that any jobs related to the wind farm be held by Maryland residents or taxpayers.
5. There is no cap on the amount of additional charges the utility can pass on to the consumer. The $2 figure contained in the proposed amendments to HB 1054 is a suggested upper limit on the amount of an estimated charge that a developer may use when estimating pricing in its project proposal. The proposal will be based on 2011 dollars but the actual price assessed against the ratepayer will be set in 2016 and will be based on the market prices at that time. The actual price will be subject to change in accordance with market rates for the entire 20 year duration of the contract.
6. There is no limit on the amount of cost overruns that the developer could pass on to the consumer. Although the Administration states that cost overruns and other types of cost components are “for the developers’ account”, the developer would be factoring in a margin for cost overruns in its proposal price and those would be passed on to consumers.
7. There are no constraints on the creditworthiness of the developer.
8. The Administration did not submit a “small business impact statement” as required. Therefore, the fiscal note does not address this issue at all except to say that a revised note would be produced when the statement is received. All estimates that have been published so far have only addressed the impact on residential ratepayers. There have been no projections on the extra cost to hospitals, local governments, colleges and businesses.

More to follow as the committee continues to meet on the bill.

Posted by Jay Hancock at 11:50 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Starting at 1:35 pm today I'll be on the C4 show on WBAL talking about Gov. O'Malley's offshore wind proposal. At 5 pm on WEAA Environment Maryland's Brad Heavner and I will be discussing the same topic with host Marc Steiner.

Posted by Jay Hancock at 1:26 PM | Permalink | Comments (0)
Categories: BGE/electricity
        

The governor defends his offshore wind proposal and responds to this column against offshore wind. O'Malley:

I realize many, including The Sun's Jay Hancock, have raised concerns about the cost of the project ("Stop O'Malley's offshore wind folly now, not later," March 27). It is important to remember that the price of electricity from wind will not fluctuate. When the Public Service Commission approves the contract, we will know how much we will be paying for 2.5 percent of our State's energy load for the next 20-25 years, a claim we can't make about the other 97.5 percent of our energy needs.

Yeah, we know how much that portion of the state's energy load will cost. A lot.

Posted by Jay Hancock at 12:30 PM | Permalink | Comments (3)
Categories: BGE/electricity
        

I knew Steve Hanke, professor of applied economics at Johns Hopkins, was on staff at (Republican) President Reagan's Council of Economic Advisors in the early 1980s. What I didn't know is that he was part of a similar CEA under (Democrat) Gov. Marvin Mandel in the 1970s. It was "an analytical shop," Hanke recalls, designed to analyze policy and forecast revenue through an economic filter.

"There's no question about it; it was a tremendous help to have it," Mandel, who'll turn 91 next month, said in an interview.

Mandel, co-chairman of Maryland Business for Responsive Government, thinks Gov. Martin O'Malley should revive the council to save the state from economic miscues. A good example, Hanke says and I agree, is O'Malley's multibillion-dollar proposal to build electricity-powering windmills of Maryland's coast. An even cursory analysis from within the governor's office might have kept the project from being proposed and might have identified more affordable alternatives.

On the other hand, I believe chief executives in all types of organizations usually do what they they think will sell to key constituencies and then cobble up the "analysis" ex post facto. Nevertheless, says Hanke: "While a governor's CEA couldn't stop all the nutty proposals, it stopped quite a few of them. This was the same experience I had on Reagan's CEA."

Posted by Jay Hancock at 6:01 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

David Sokol, the chief of MidAmerican Energy who saved Constellation Energy from bankruptcy in the thick of the 2008 financial crisis, has abruptly resigned from Berkshire Hathaway, MidAmerican's owner. Sokol was the guy who negotiated with Constellation boss Mayo Shattuck and extracted a huge ransom from Constellation shareholders for the rescue.

Andrew Ross Sorkin reports some stock transactions by Sokol that might be perceived as front-running Berkshire shareholders. Berkshire recently announced it would buy Lubrizol, and Sokol had been buying Lubrizol stock earlier. Sorkin:

Mr. Sokol purchased 2,300 shares of Lubrizol on Dec. 14, which he then sold on Dec. 21, according to Mr. Buffett. On Jan, 5, 6 and 7, Mr. Sokol bought 96,060 shares “pursuant to a 100,000-share order he had placed with a $104 per share limit price,” Mr. Buffett’s statement said.

Here is an excerpt from a good Fortune profile of Sokol after his staredown with Shattuck:

Sokol phoned the office of Constellation CEO Mayo Shattuck III, who was in an emergency board meeting. When his assistant answered, Sokol told her he'd like to speak to him. The secretary replied that if she interrupted the meeting, she might lose her job. Sokol replied, "If you don't interrupt the meeting, you might lose your job."

Sokol boarded a Falcon 50EX and sped to Baltimore. He met with Shattuck and struck a deal that evening to buy the company for $4.7 billion, staving off bankruptcy.

Posted by Jay Hancock at 9:44 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

Julie Bykowicz blogs that Gov. O'Malley has modified his proposal to build offshore wind generators again. Initially he would have capped extra payments for residential utility customers at $2 a month -- but only for a year. Now would cap the monthly payment at $2 -- indexed for inflation, which means it could rise over time -- for the life of the 25-year contract.

Since many credible studies suggest that the cost to build and run these things would be much more than $2 a month on the residential side, you wonder how the costs would be recovered under the new plan if they break the budget.

Posted by Jay Hancock at 12:13 PM | Permalink | Comments (1)
Categories: BGE/electricity
        

Lots of response to Sunday's column, Stop O'Malley's Offshore Wind Folly. Most commenters agreed with the column that offshore wind is a dumb idea for Maryland. A sampling:

I just re-read Sunday's column and I disagree with your premise that wind farms are too costly for Maryland. As many have noted that if you wait until the right time to have a child, you will never be a parent, I posit that if you wait until alternative energy is cost effective to create, we will never get it. I, too am appalled by the cost of energy in Maryland however your argument that natural gas prices have plunged and are expected to stay low is a statement that is just as airy as saying that there will be cost overruns and wind farms will end up costing much much more than the numbers being presented to the state government. If government will not invest, then I doubt the private sector will either and even if we don't run out of natural gas or oil in my lifetime, we will run out eventually.

And:

I thought you leftists loved the wind!! Tell the people in Western Maryland that they should stop mining that poisonous coal before global warming overtakes the state. Did you turn your lights off for an hour last Saturday night?

And:

I read your column and can't wait for your next____

"What to do when there is no more natural gas?"

And:

From what I see is that the politicians are only looking at the cost to provide the wind turbines. Ignored are the costs of transmission lines and on-shore facilities.

Wind turbines provide energy that vary with wind conditions. An on-shore facility would be needed to address those variations. Quite possibly, the on-shore facility would include a conventional power plant to address the energy valleys of the wind turbines.

Combined with expected legal fees, the cost to provide a total wind turbine solution appears to be quite exorbitant and the solution probably would fail to meet the energy relief anticipated.

And:

Continue reading "How dumb is offshore wind? Readers weigh in" »

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (7)
Categories: BGE/electricity
        

Sunday's column criticized Gov. Martin O'Malley's proposal to build a grandiose set of offshore wind generators. Eastern Shore Republican delegate E.J. Pipkin, who has long been vocal on Maryland energy issues, says offshore wind is a multibillion-dollar "tax" on Marylanders. (It's not really a tax, but it would act like one.)

In an interview with MarylandReporter.com, Pipkin says, "Only a very narrow group of developers are going to be able to get the real benefits from this." The projects "is extremely costly to consumers," he says, "an aggressive project of 120-plus windmills off the coast of Ocean City.... It's hard to get away from that."

People argue about the ultimate cost, Pipkin says, but whatever the number "it's still multibillion dollars in additional tax."

Posted by Jay Hancock at 10:28 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

The Maryland Office of People's Counsel opposes legislation being considered in Annapolis that would require BGE and other utilities to disclose your name, address, utility account number and information on a year's worth of gas and electricity use to third-party power suppliers.

The retail suppliers who compete with BGE's standard electricity and gas products say the information would help competition by letting them tailor deals to customers' specific needs. But People's Counsel Paula Carmody says BGE should be allowed to give out your electricity profile only if you expressly agree to it. And the legislation doesn't contain that safeguard. Rather, BGE gives you written notice that they'll disclose your info unless you object. If they don't hear back from you within 45 days -- even if you just ignore them -- it's open season on your information.

The coming of computerized "smart" meters, Carmody says, may increase the amount of information that might be available -- your daily electricity use and maybe even which appliances you use on which days.

BGE supports the bill, according to Electric Utility Week. But Pepco supports the bill only if it's changed to require customers to affirmatively agree to information disclosure -- and "opt-in" provision rather than the "opt-out" design now contemplated, EUW reports.

I probably don't get as excited about privacy issues as I should. Red light cameras? (I'm a frequent customer.) Fine. Direct Energy knows I set my thermostat on 67 in the winter? What's the big deal?

However I'm sure others feel differently. This legislation is moving through the assembly pretty quickly, so if you object you ought to tell your delegate and senator now.

Posted by Jay Hancock at 6:02 AM | Permalink | Comments (3)
Categories: BGE/electricity
        

Good midcourse handicapping on the offshore wind legislation by the Daily Record's Nicholas Sohr. I haven't looked at them closely, but Mac Middleton and Dereck Davis are right to question the bills, which seem rushed. Sohr reports:

“I have real concerns about [the bill] right now,” said Sen. Thomas M. “Mac” Middleton, D-Charles, chairman of the Senate Finance Committee, through which the governor’s bill must pass if it is to get a vote in the full chamber.

Middleton said worries about the cost have generated interest in watering down the legislation, SB 881 and HB 1054, to study the issue over the summer.

And:

“I think there’s a reluctance to do anything that raises electric bills any amount,” said Del. Dereck E. Davis, chairman of the House Economic Matters Committee. “Even if you’re on the low end of the range, I think that’s something that folks have reservations about.”

The Sun's Annie Linskey reports:

But Middleton said the bulk of the opposition is centered on the costs to ratepayers. After facing tough elections and angry votes last November, many senators and delegates are particularly sensitive to pocketbook issues.

House Speaker Micheal E. Busch did not sound as rushed. "It is a distance run, not a sprint," he said. Complicated legislation, like the wind bill, can benefit from "thorough dissection," he said.

"Sometimes it takes more than one session," Busch said.

Posted by Jay Hancock at 8:59 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Thanks to the alert readers relaying news of BGE Home's offer of a one-year natural gas contract at 67.8 cents per therm. Is it a good deal?, they want to know.

It's certainly one of the lowest fixed-price gas contracts in years. The cost of natural gas has plunged in recent years because the bum economy reduced global demand and because newly available shale gas has increased the U.S. supply. Take a look at BGE's commodity gas price in recent years. In January 2011 it was 63.04 cents per therm. In January 2010 it was 72.59 cents. In January 2009 it was $1.0371, and at one point in 2008 it hit $1.5763.

These fixed-price offers from BGE Home, Washington Gas Energy Services and others are alternatives to the standard offer from BGE. (Don't confuse BGE with BGE Home. Yes, everybody does.) The standard BGE natural gas product floats from month to month depending on the spot market and on what BGE paid the summer before for stored gas.

I'll lay out the pros and cons of the BGE Home deal.

Pro: Although 67.8 cents per therm is about 10 percent higher than the standard BGE price for this winter and could well be higher than BGE's standard price for next winter, standard prices are not likely to fall much farther. By locking in for a year you'd miss out on potential savings of

Continue reading "Should you take BGE Home's natural gas deal?" »

Posted by Jay Hancock at 6:01 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

I thought my latest BGE bill looked too low -- $128.84 including gas and electric for a cold, windy, miserable month. Turns out BGE didn't charge me for the 430 kwh of electricity I burned in February. I paid $20 for BGE to deliver the juice and for all the electricity nuisance charges. But for the power itself, says the fine print on the bill, "Current electric supplier charges not available for this billing period."

I don't mind! But I bet Castlebridge Energy, my supplier, wants the money. $38.49 at my price of 8.95 cents per kwh.

Posted by Jay Hancock at 1:36 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

Today's column is about the lamentations rising from the energy industry over New Jersey's plan to lower electricity prices and retake control of its energy future. Republican(!) N.J. Gov. Chris Christie just signed a bill that would require utilities to buy power from a specified price from newly constructed generation plants. Contract in hand, the plant developers can get financing and build the facilities.

New Jersey gets a twofer: 1) New, cleaner generation capacity to run its future economy. 2) Capacity that can be offered into the PJM capacity auction and bring down sky-high prices for reserving future generation time -- thus saving New Jerseyans money. Maryland is contemplating a similar course, although it might not happen for a year.

BGE owner Constellation Energy and other power companies are outraged that the PJM auction rules, which have enriched them for years, could be used to save consumers money. So they're petitioning the Federal Energy Regulatory Commission to get them changed, to raise the minimum price for generation capacity. Unfortunately, they have a good chance of winning. FERC seems just as clueless and intransigent under Obama as it was under Bush, possibly because of the large debt that Obama owes Chicago-based Exelon, one of the biggest U.S. generation companies.

Here's a January 2008 Hancock column:

Pay no attention to whether Sen. Barack Obama's ties to Exelon Corp. might make him sympathetic to storing nuclear waste in Nevada. That argument, aired before that state's Democratic caucuses last week, is a sideshow.

A bigger question is how Obama's Exelon links might influence his broader electricity policy at the most critical period for U.S. electricity since the 1930s. Exelon, the Illinois version of Baltimore's Constellation Energy, is one of the country's biggest megawatt producers, the largest nuclear plant operator and a huge Obama backer through its executives and employees.

Posted by Jay Hancock at 9:57 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

The Feb. 6 column was about how independent electricity companies continue to spin fairy tales about how much money people are going to save by switching from BGE's standard offer. And they nail people with high early-termination fees buried in the fine print. There are at least a couple bills pending in Annapolis that would improve education and consumers and tighten up standards for the kilowatt sellers.

One bill would require the Public Service Commission to have a a portion of its Web site as a comparison-shopping portal for people contemplating switching electricity companies. It would list BGE's and Pepco's standard price to compare and all the competing prices. This is basically what the Office of People's Counsel does now.

A week ago Del. Al. Carr sent me a draft bill he said he would be introducing. I don't see it on the General Assembly's Web site yet, but here is the key language:

(2) A RESIDENTIAL SUPPLY CONTRACT MAY NOT CONTAIN AN AUTOMATIC RENEWAL CLAUSE. 7 (3) IF A RESIDENTIAL SUPPLY CONTRACT REQUIRES THE CUSTOMER TO PAY AN EARLY TERMINATION FEE OR PENALTY ON CANCELLATION OF THE CONTRACT, THE TERMINATION FEE OR PENALTY SHALL DECREASE BY AN EQUAL AMOUNT EACH MONTH SO THAT THE CUSTOMER OWES NO TERMINATION FEE OR PENALTY AT THE END OF THE CONTRACT. (4) AN ELECTRICITY SUPPLIER MAY NOT REFUSE TO PROVIDE 13 SERVICE TO A PERSON BECAUSE THE PERSON PREVIOUSLY CANCELED A 14 RESIDENTIAL SUPPLY CONTRACT.

The biggest item, from my point of view, is the one prohibiting automatic rollovers. It's a great idea -- this is where companies make a lot of their stupid money from consumers. People sign up for what's initially a good deal. They save money. But a year later, the contract automatically renews to a not-so-good deal. Suppliers are required to notify customers by mail of the new terms, but people don't pay attention.

We could call section 4 "the Hancock clause." When I terminated my 10.8-cent, 3-year deal from Washington Gas Energy Services, I tried to sign up with WGES for their new, cheaper deal. But they wouldn't let me, saying early-termination customers had to wait for a certain number of months to re-sign.

Posted by Jay Hancock at 9:44 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

Here is BGE's latest press release on restoring power. From now until Sunday is a long, long time with no lights and no heat.

Baltimore Gas and Electric Company Expects Electric Service to the Vast Majority of Remaining Customers Affected by this Week’s Snow Storm to be Restored by Late Saturday with some Scattered Outages Extending into Sunday

Service already restored to nearly 160,000 Customers – More Than 75 Percent of All Affected Customers

Customers advised to avoid downed wires and report them immediately at 1-877-778-2222


BALTIMORE, Jan. 27, 2011 – Baltimore Gas and Electric Company (BGE), today announced that electric service to the vast majority of remaining customers affected by this week’s snow storm should be restored by late Saturday with some scattered outages extending into Sunday. The utility has already restored electric service to nearly 160,000 customers – more than 75 percent of all affected customers. Wednesday’s heavy wet snow caused trees

Continue reading "BGE: Some could lack power until Sunday" »

Posted by Jay Hancock at 6:06 PM | Permalink | Comments (6)
Categories: BGE/electricity
        

Today's column calls for Maryland to partially re-regulate electricity. Like "health-care reform," electricity re-regulation has a million different meanings. I'm suggesting re-regulation lite. Some have been calling for Maryland to seize generation plants by eminent domain and force them to adopt new pricing plans. That would be complicated, hugely expensive and reinforce Maryland's "People's Republic" reputation.

Instead, the state should look at forcing BGE and Pepco to buy electricity from a new gas-fired power plant. Although BGE/Pepco customers would pay for the plant's electricity, it would be built with private dollars. And the extra megawatts brought to the table would bring down PJM Interconnection's exorbitant "capacity" prices, for which everybody has to pay through the nose and which have given Maryland little in return. I love the idea, being floated in New Jersey and here, of bidding new plants' capacity at "zero" into PJM's capacity auction, thereby using PJM's own artificial rules against the incumbent power companies.

Competitive Power Ventures has been proposing a gas-fired plant in Charles County for some time now, with some interesting features. The CPV plant could be bid into the capacity auction at zero, which would bring down Maryland capacity prices. The extra supply of energy would also bring down the energy component of the PJM auction prices. CPV pledges to open its books and build the plant along the lines of the old, "cost-plus" deals under regulation.

The Public Service Commission has the power now to order BGE and Pepco to buy power from CPV or some other plant. Yes, the plant's capital costs would be built into BGE and Pepco prices. But CPV argues that it would actually save consumers money because of the effect on overall wholesale prices. That's something the PSC should verify, but it's an intriguing proposition. To ensure Maryland new electricity supplies and to start replacing the dirty coal plants now creating our megawatts, the deal may be worth doing even if it doesn't absolutely lower prices.

Posted by Jay Hancock at 9:33 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

Tomorrow's column calls on Maryland authorities to stop totally relying on the deregulated wholesale electricity markets and look closely at ordering BGE and other utilities to buy megawatts directly from private companies that will build new generation plants. We've been abused by deregulation for 10 years; it's time for the state to start determining its own fate. The column grew out of a symposium last week in Washington sponsored by the American Public Power Association, trade group for government-owned utilities, which has been very good about identifying and criticizing deregulation problems.

I kicked off the day by summarizing the woes of Maryland and BGE customers under deregulation. (As usual in these situations I got no compensation from APPA for the talk.) Here are my notes from the speech:

"Improving RTO markets." That’s an optimistic title for this symposium. I can’t tell you so much how to improve them, but I can tell you how screwed up they are from the perspective of Maryland.

For a decade Maryland residential and commercial ratepayers have been dealing with botched deregulation and a wholesale market that is sharply tilted in favor of incumbent generation companies and speculators. Between them deregulation and the flawed PJM market have cost Maryland tens of billions of dollars in excess electricity charges.

Like other states we had the Enron lobbyists, we had the blue-sky portrayals of falling prices and surging investments. But of all the states that deregulated, Maryland had about the lowest electricity prices. So it had the most to lose. My memory could be bad but I think BGE residential prices were about 7 cents/kWH, bundled.

We had a decent fleet of regulated coal and nuclear plants that were sold to Mirant, in the case of Pepco, and transferred at book value to an unregulated affiliate in the cast of BGE. Instantly Marylanders became much more exposed to the vagaries o the PJM wholesale market, subject to price caps that expired after a few years.

Continue reading "The messed-up wholesale electricity market" »

Posted by Jay Hancock at 11:58 AM | Permalink | Comments (6)
Categories: BGE/electricity
        

More broadcast content. Maryland Public Television's Jeff Salkin and I talk about the failure of plans to start building another nuclear reactor at Calvert Cliffs.

Posted by Jay Hancock at 1:15 PM | Permalink | Comments (0)
Categories: BGE/electricity
        

Faithful readers know I signed a three-year electricity deal with Washington Gas Energy Services at 10.8 cents per kilwatt hour a while back. Anybody in Maryland can now shop for electricity just as we all shopped for long-distance phone service in the 1990s. Since Baltimore Gas & Electric's default kilowatt price fell below 10.8 cents on Oct. 1 and offers from independent suppliers fell even further, I decided to pay an early-termination penalty to WGES and sign up with somebody else.

My new vendor: Castlebridge Energy. Price: 9.2 cents per kilowatt hour, which is among the lowest listed by the Maryland Office of People's Counsel, which is always a good shopping resource. (The OPC site also lists deals for wind energy.) Not only is the Castlebridge price good; there is no early-exit penalty if prices drop further and you want to switch to a new deal. You give them 60 days' notice and you're out. Most companies make you pay extra if you dump the contract before it officially expires.

(WGES has an even lower price -- 9.0 cents. And you can get 8.9 cents through some dealers. But WGES doesn't allow people like me who terminate existing contracts to immediately re-sign with them.)

The switching process so far has gone smoothly. WGES promptly took me off their customer list and charged the correct early-exit fee. I assume Castlebridge will be the vendor of record for the bill I get at the end of December. We use about 900 kwh a month, on average, so we'll spend about $170 less over the next year than if we had stuck with the 10.8-cent WGES deal. Of course, the $126 early-cancellation fee paid to WGES wipes out much of that savings. However the WGES deal didn't expire until mid-2012, so we'll go on saving during that year.

ALERT: If you switch to WGES, Castlebridge or another independent electricity supplier, that will NOT affect the Peak Rewards you get from BGE for allowing them to cycle your AC off and on in the summertime. You'll remain in the Peak Rewards program and continue to get rebates for cutting expensive electricity use. BGE is always your local utility no matter whom you buy your electric supply from, just as Verizon/Bell Atlantic was always your local phone company in the 1990s no matter whom your long-distance company was.
(This is the most frequently asked question of all FAQs on this blog.)

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (8)
Categories: BGE/electricity
        

A cold weather forecast has pulled natural gas prices up from an eight-year low, Bloomberg reports. That will probably be reflected in BGE's residential natural gas price for January.

But while prices may have notched up, they're rising from really low levels. The recession and a worldwide natural-gas glut have depressed gas prices and profits. The default natural gas price for BGE customers this month (the floating price you get if you don't lock in with another supplier) is 63.71 cents per therm, the lowest price for December since at least 2003.

The best one-year fixed price from competitive suppliers listed on the Office of People's Counsel Web site (look on the mid-right side of the page; click on "Natural Gas Retail Supplier Prices") is from Washington Gas Energy Services, at 66 cents per therm.

Bloomberg:

Gas advanced 3.2 percent after the National Weather Service reduced its temperature forecasts for eastern states from Dec. 11 to Dec. 15. Gas prices were trading at the lowest level since 2002 for the beginning of December.

“Cold weather is the primary driver of gas prices,” said Brad Florer, a trader at Kottke Associates Inc., an energy trading firm in Louisville, Kentucky. “It looks like below- normal temperatures are going to hang on for most of the month, and that’s stifling the selling and lifting gas off the bottom.”

Posted by Jay Hancock at 7:47 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

From the San Francisco Chronicle:

A Pacific Gas and Electric Co. executive in charge of the utility's SmartMeter program admitted Monday that he used a fake name in an effort to join an Internet discussion group of SmartMeter opponents.

William Devereaux, senior director of the $2.2 billion SmartMeter program, used the name "Ralph" when he sent an e-mail to the moderator of a discussion group for people trying to block deployment of the new, wireless electricity and gas meters. But his real name appeared next to his e-mail address.

In an interview with The Chronicle, Devereaux said that he had been monitoring online groups of SmartMeter foes for a couple of months.

"I joined that (group) anonymously to better understand the concerns and the points of view of those folks so that we could do a better job of getting our facts to our customers," he said. "I did make a mistake, obviously, in trying to join this ... group and trying to use that alias name, which I'm sorry for."

HT Carol

Posted by Jay Hancock at 1:33 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

Commenter Jonathan believes that the opportunity costs of shopping for electricity, poring over your cell phone contract and figuring out how you're getting abused on your cable bill are way too high. Instead of calling WGES to cancel your electricity deal with the intention of switching to a new deal so you can save $10 a month, which will require another phone call and further study, he seems to be suggesting, you could be listening to Brahms or making love to your spouse.

Hard to argue that he's wrong. It's unclear, however, whether his solution is just to pay the extra dough and be happy or to get rid of the cell phone and TV.

We do not have a free enterprise system in this country and never have. Why should we all have to spend countless hours figuring out how the power companies, or the cell phone companies, or any of the other utilities, are screwing us over, and which one is screwing us less, or more, than the others? What a waste! How old are you, Mr. Hancock? How many years do you have left? On your deathbed, will you be happy that you allowed the government regulators/BGE/et al. to waste all of those hours/weeks/months of your time?

Posted by Jay Hancock at 8:55 AM | Permalink | Comments (15)
Categories: BGE/electricity
        

Early in 2009 I signed up for a 3-year, fixed-price electricity deal from Washington Gas Energy Services at 10.8 cents per kilowatt-hour. This was substantially below the default rate being offered by BGE, so I saved a few bucks a month for a while. But starting Oct. 1, BGE's standard price for energy/transmission fell to 10.1 cents. And independent marketers are selling juice for less than that. WGES's best deal is 9.0 cents/kwh for 12 months.

So last week I dumped my old WGES contract, paying a $126 early-termination fee, which I knew would happen. I figured I would go back to the default BGE price for a couple months and then switch back to WGES at 9 cents, eventually saving more than the early-termination cost.

But after I noted my intentions on the blog, WGES director of regulatory and legislative Leah Gibbons called to point out (nicely!) that customers who cancel contracts early can't re-sign with WGES right away. "You're going to be blocked from rejoining WGES for a 12-month period," she said. While the early-termination fee is a disincentive for customers to switch back and forth between contracts, it doesn't cover WGES's cost for the lost revenue for the energy for the remaining period, she said. Blocking people from re-signing is supposed to further discourage people from switching early. The policy covers anybody who gets out of a contract early, and there indeed is language in the fine print that indicates they can do this.

I would have thought WGES would prefer having a customer at 9 cents over having no customer at all, but it's welcome to do business as it likes. The lesson in all this is that electricity shopping contains complications that many of us don't see when we first sign up.

UPDATE: I should have noted that of course I'm still free to sign up with Dominion Retail or some other independent supplier at less than BGE's 10.1 cents, which I intend to do. I got the letter from BGE yesterday confirming the termination of my WGES deal, and they said if they heard by Nov. 14 from another supplier they would switch me to them in time for the next billing cycle. May take them up on that.

UPDATE2: Notes reader Tim:

So not mentioned in your write-up is also the fact that if you want WGES to reduce you to the 10.2 they want to extend the contract through May, 2013.

It's a good point. If you have a long-term deal of 10.8 or 10.9 cents, WGES will often offer to lower your price -- if you agreed to extend your contract. Given the high early-termination fees that WGES charges these days -- even higher than what I had to pay -- this may be an attractive option.

Posted by Jay Hancock at 9:04 AM | Permalink | Comments (20)
Categories: BGE/electricity
        

The French EDF Group and Baltimore-based Constellation Energy seem to have worked out their differences over Constellation's exit from their joint venture to build a new reactor at Calvert Cliffs in southern Maryland. But the challenges to the project that caused Constellation to bail out remain.

The U.S. government is demanding stiff terms to guarantee construction loans for the reactor. EDF's construction of a similarly designed reactor in Flamanville, France is not going well -- cost overruns etc. Maryland's electricity market is deregulated. That means greater risk for EDF and U.S. taxpayers. Without guaranteed revenue ordered by the Public Service Commission, the new reactor will have to sell its electricity in the wholesale market and hope for the best.

Vast new supplies of natural gas will keep prices for megawatts from competing gas-fired generation plants uncomfortably low for nuclear developers and their backers. The failure of a climate-change bill means that non-nuclear energy won't be taxed for its carbon emissions, which would have made coal- and gas-fired plants less competitive.

And EDF apparently still needs to find a U.S. partner to take Constellation's place. Who will fill that spot? Tactically this may have been a smart move for the French. By reaching a comprehensive deal they got Constellation's agreement not to exercise a put option to sell them overvalued fossil-fuel plants. Basically they're taking over UniStar for $250 million when you include the $140 million they're paying for the venture and the $110 million in CEG stock they're paying to settle the option question.

That may be a cheaper outcome for them than if Constellation had decided to pull the option trigger. But it doesn't change the fundamentals of the Calvert Cliffs project.

Posted by Jay Hancock at 8:58 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

Constellation Energy Group's board met on Friday, and there was speculation that it would vote to exercise an option to sell fossil-fuel electricity plants to France's EDF Group. The plants are worth $1 billion. The option gives CEG the right to sell for $2 billion. Naturally the French really really don't want CEG to pull the trigger. But CEG seems not to have yet exercised its "put." If the board had acted one would have expected an announcement on Friday. And the French press is reporting that Baltimore-based CEG has not yet moved on the option.

From Enviro2B:

NUCLEAIRE – Constellation n’a pas (encore) levé l’option

Dans le conflit qui l’oppose à son partenaire américain, EDF a gagné du temps. Sur la demande express de l’électricien français, Constellation n’a finalement pas décidé pour l’heure de lever l’option lui permettant de se faire racheter à prix d’or 11 de ses centrales thermiques américaines, pour 2 milliards d’euros.

Posted by Jay Hancock at 8:47 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Except it's not tax-deductible, it's not voluntary and Constellation Energy, owner of Baltimore Gas & Electric, doesn't need the money. Sunday's column is about an obscure cost that got built into your BGE bill (and Pepco, Allegheny or whoever your utility is) starting in 2007. It pays for generator "capacity" -- the right to buy megawatts from a particular generator at a particular time. Grid managers PJM Interconnection, heavily influenced by Constellation, Mirant, Exelon and other generation company, changed the rules for buying capacity in 2007 in a way that hugely inflated costs for residences, businesses and factories -- especially in the BGE and Pepco areas. The new way of selling capacity is called the "Reliability Pricing Model," or RPM.

Read the column, which reports that the 2007 change is costing Maryland $5 billion extra for the period from 2007 to 2014. People have been angry about the RPM charge for a while, and they just got angrier, because the price for the latest auction headed into the stratosphere. I wanted to calculate what the gimmick is costing Maryland and BGE customers. The extra dough was supposed to incentivize generation companies to build Maryland plants, but they haven't. So the $5 billion, while some of it has probably financed environmental upgrades and other fixes to keep old plants open, is mostly profit for Constellation and other generation companies.

I promised in the column to publish the math behind the numbers. Total Maryland costs for capacity charges for the seven years (we know this because the auctions through 2013/2014 have been completed) are $5.92 billion, according to the Maryland Public Service Commission. (Don't forget -- this is in addition to paying for the electricity, the tree-trimming, the meter readers and everything else that goes into your BGE bill.) That's based on RPM prices, minus CTR credits (don't ask) ranging from of a low of $28 per megawatt day in the Allegheny zone for 2013/2014 to prices well over $200 for the BGE and Pepco zones in some years.

The question is: What would those costs have been without the new RPM rules for reserving capacity? To get an answer we look at what capacity cost in the BGE zone and elsewhere in Maryland in 2006 and earlier. I got a couple numbers. One energy economist said capacity cost about $18 per megawatt-day in the four years preceding the new rules. Another said it was more like $25. In any case capacity was about a tenth as expensive before the rule change as it is now. For purposes of comparison I went with the higher, more conservative "before" figure: $25. And if capacity cost $25 per megawatt-day today, as it did before they rigged the rules, Maryland's capacity costs for the same total demand would be a mere $900 million from 2007 to 2014, not $5.9 billion. Difference: $5 billion. (If anybody's interested I'll send the spreadsheets broken down by utility zones.)

The BGE and Pepco zones receive special pain because of how the auction is designed. BGE households, offices and factories will pay $3.17 billion in capacity charges from 2007 to 2014, according to the PSC -- average capacity price minus CTR credits of

Continue reading "Constellation says thanks for the charitable gift " »

Posted by Jay Hancock at 9:35 PM | Permalink | Comments (6)
Categories: BGE/electricity