BGE AMI program approved – with conditions


Baltimore, MD, U.S.A. — (METERING.COM) — August 16, 2010 – The Maryland Public Service Commission (PSC) has approved Baltimore Gas & Electric (BGE) Company’s advanced metering infrastructure (AMI) initiative – but the company may only seek cost recovery for the project after it has been delivered.

In a 51 page Order released late Friday the Maryland PSC said that BGE had obviously attempted, in good faith, to address the issues that precluded the PSC from approving the initiative before (in June). However, these revisions do not entirely cure the concerns that caused the PSC to deny approval the first time.

Accordingly BGE is authorized to deploy its AMI initiative, and may seek cost recovery – that may include the incremental costs to implement the AMI initiative, as well as the net depreciation and amortization costs relating to the meters, and an appropriate return for those costs – “at the time that the company has delivered a cost effective AMI system.”

BGE’s AMI plan was previously rejected by the PSC on the basis of the business case being “untenable,” and principally because of the inclusion of a surcharge, or “tracker,” for the advanced recovery of the costs from customers (see BGE’s smart meter plan in limbo). Subsequently BGE submitted a revised plan, and with a $200 million stimulus funding award for the project at stake, the PSC agreed to expedite review of the revised plan ahead of the deadline on which the U.S. Department of Energy would make a decision on whether to reallocate this funding – August 16.

In its Order, the PSC said that the cost recovery for the legacy meters that BGE will remove to replace with “smart” meters shall be considered in a future depreciation proceeding.

Further BGE must submit for approval an updated customer education plan, and the company must develop a comprehensive set of installation, performance, benefits and budgetary metrics against which the progress and performance of the initiative can be assessed.

“As now structured, we believe that this initiative would be a win-win proposition for BGE, its customers and our state, and we hope that BGE will choose to proceed,” said the PSC in its Order. However, with BGE having indicated that it would not proceed without the cost recovery “tracker” – in its revised plan BGE proposed a surcharge to recover approximately 25 percent of the project costs starting in January 2011 – “whether or not to go forward is, obviously, BGE’s decision.”

At the time of posting, BGE had yet to state whether it would now proceed with the initiative, under which smart meters would be deployed to its 1.2 million customers.