The Maryland Public Service Commission (PSC) on Friday conditionally approved Baltimore Gas and Electric Co.'s (BGE) revised smart grid implementation plan.
As a result, BGE, a subsidiary of Constellation Energy (NYSE:CEG), will move forward with implementation of a multi-million dollar plan that will receive $200 million in support from the U.S. Department of Energy.
The program and the funding were in jeopardy, after the PSC rejected the utilities plan in June, and it has been watched closely by utilities and state regulators across the country. The Maryland regulators objected to BGE's proposal to recover funds from ratepayers through a surcharghe, before ratepayers could expect to reap the cost benefits of smart grid improvements.
BGE says the lifetime benefits of the program will equal $2.5 billion dollars for its customers. The total cost of implementing the advanced metering infrastructure (AMI)--aka smart grid--is expected to be $1 billion.
The PSC decided that the smart grid project should be treated as a regulatory asset, similar to a new power plant. And as such, BGE should recoup its costs through base-rate increases, not through surcharges.
BGE accepted the terms, and the PSC said it would perform an ongoing review of BGE's costs and recovery, allowing the company to raise rates, once it has "delivered a cost-effective AMI system."
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