BGE's ambitious plan for two million smart meters

Baltimore Gas & Electric's (BGE) recent announcement that it plans to install two million smart meters between now and 2012 is exciting and full of promise.

I say "promise" because that's all it is at the moment. But if it works out as the company projects, BGE's   customers will reap more than $2.6 billion in savings over the life of the project. That's five times the initial cost of $500 million to install the meters although BGE estimates a 3 to 1 savings to cost benefit. In terms of electricity, BGE says the savings amount to 1,700 megawatts or the entire output of one nuclear power plant (that's if BGE could ever get permission to build one).

The smart meters will be linked via a network to the utility which will encourage customers to defer energy use to period of off-peak consumption. A Smart Energy Pricing Program (SEP) will "rebate" customers for consuming electricity in off-peak hours, which means shutting off appliances between 2-7 p.m. However, the SEP program does not launch until 2012 and must first pass through regulatory hoops.

For example, a smart washer and dryer could be timed to run in the wee hours of the morning. It would be both impractical and unnecessary to prepare breakfast at 3 a.m. and dinner at 11 p.m. if cooking with gas. As a result, smart meters for gas will focus on automating the metering and little else. After all, gas can be  stored and used when needed whereas electricity is largely wasted if it's not used when produced.

The proof is in the pilot program, according to Mark Case, BGE's Sr. VP of strategy of regulatory affairs. In a pilot test conducted last year, customers lowered their bills between 26-37 per cent for an "on average" savings of $100 which I assume to mean as a total during the pilot, not every month. Several stories chronicle the the pilot program and customers say it wasn't hard to modify their consumption.

The program won't be free, of course. BGE will start assessing customers a monthly surcharge in the fourth quarter that ranges between 38-44 cents and over the its life will average out to between $1.24-$1.52. That's $15-$18 a year with a pretty good chance that if you take advantage of the smard grid, savings will be greater than the cost. These surcharges also will revise downward if BGE gets the $200 million grant it's applied for from the Dept. of Energy which will start awarding Stimulus funds in October.

Certainly, I will get the savings when my provider offers me a smart meter because I'm interested in it and have some level of technical understanding. While the number of people paying attention to their utility bills is increasing, my sense is many still don't - especially renters who have no financial incentive to do so (visionary landlords offering incentives could be the answer, though).

Enter the orb. BGE in its pilot tests has simplified notification that the customer is within a peak period by providing an orb that behaves like a traffic light. When it's green, consume away. When it's orange, turn stuff off. When red, there's a critical power shortage. I guess when it's no color, the power is out.

Newspapers in the Maryland area have written some good stories on how the orb works. The orb isn't part of wider implementation and will likely be replaced with gadgets that provide richer information such as what you've spent to date or are consuming at that moment.

I also want to know more about how the network will work and how secure it will be (a post on this will immediately follow this one). Already, a negative drumbeat is sounding that the Smart Grid is nothing more than spying on the citizenry and a way to extract more money from them. But extravagant and paranoid language tends to undercut naysayer arguments.

For instance, one calls the smart grid "the scam of century" so Big Brother can keep tabs on us. Several scams would be much higher on my list. Madoff and credit default swaps immediately come to mind.

In the main, the smart grid isn't just a good idea. It's imperative. And it's not just the savings and positive impact on the environment. A entire industry will rise up around the smart grid that will produce jobs, new appliances and Internet technology that equip customers with tools and automation to manage their utilities...their lives.

Indeed, BGE is already talking about wireless technology on top of the smart meter that can tell a charger when it's time to pump some juice to the car you'll take to work in the morning. I like that kind of talk.

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This post was originally published on Smartplanet.com