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PSC Decision on Rate Increase and Embracing Utility 2.0
July 31st, 2013

Pepco Update

Earlier this month, the Maryland Public Service Commission approved a partial rate increase for Pepco.  The County and I fought hard against this rate increase, arguing that Pepco should, at best, only receive 1/10th of what it asked for. I am disappointed that the Commission, instead, granted them slightly less than half.

 

With the rate increase granted by the Public Service Commission, average residential customers can expect an additional $2.19 on their monthly bills.

 

In its latest request, Pepco sought from the Commission "automatic trackers", which allow Pepco to collect an immediate return for reliability investments. The Commission had never awarded an automatic tracker before and I did not believe they should start now.  Unfortunately, the PSC allowed for some automatic trackers, but thankfully limited them to just a few feeders -- or 20% of what Pepco had requested. I urged our County to appeal this decision, and I am pleased to report that we will be doing so.

 

Despite the PSC's ruling, my goal in the short term remains the same: require Pepco to make significant reliability improvements as soon as possible, and base their financial returns on their performance and reliability -- not on the dollars they spend.


But my goal in the long term continues to be to urge the PSC to embrace a utility concept known as "Utility 2.0."  I recently spent time at a national energy conference and the prevailing consensus among energy experts, utility executives, and think tanks is that a revolution along the lines of Utility 2.0 is coming -- and coming soon.  I want Montgomery County to lead on this front, and I have urged our regulators at the PSC to formally consider the good work of the Energy Future Coalition, which maps out what a Utility 2.0 pilot program would look like.

Imagine a utility where you control your appliances remotely using a smart phone app; a system that allows you to be part of your own clean energy micro-grid; a system where you can easily sell solar energy from your roof top, battery stored power from your electric vehicle, and energy that you saved back into the system; a distribution system that is self-healing after a storm.  That is not mere fantasy -- THAT is the future that Montgomery County can have.  I expect the Public Service Commission to weigh in on the Utility 2.0 pilot program proposal later this year. The Baltimore Sun ran an op ed yesterday that I authored on this subject, which you can see here
Advancing a Better Utility Model
May 16, 2013
Public Power: Is it Right for Montgomery County?
I don't need to tell you that we need a "revolution" when it comes to utility service to our community.  We have all experienced one of the most glaring signs of our antiquated system - among the worst reliability in the nation.  And that must be fixed, and fixed soon.  But reliability issues are themselves symptomatic of a much larger failing, the failure to have the kind of utility service that we should expect in the 21st century.  We need utility service that Steve Jobs would be proud of - we need "Utility 2.0".
 

At my urging, the Governor's reliability task force requested the Energy Future Coalition to provide a framework for two pilot programs that would lead us toward Utility 2.0.  The task force acknowledged the need for "big, bold thinking."  Yesterday, I released their long awaited report in a filing with the Maryland Public Service Commission.  It clearly fulfills the request for "big, bold thinking."  It envisions turning the utility paradigm upside down:  allowing consumers, not the utility companies, to control our energy future -- a future they believe can be more cost-effective, efficient, greener, technologically advanced, and less vulnerable. 

 

Specifically, the Energy Future Coalition submits that the model "Utility 2.0" would consist of the following qualities: 

 

- Performance-based ratemaking: aligning the financial returns of utilities with how it performs on key metrics;
- Having a smarter, customer-driven grid: giving customers more control over their energy consumption using advanced, real-time technologies;
- "On-bill" financing: allowing utilities to finance and customers to repay efficiency investments directly through their bill;
- Micro-grids: that will allow large customers and neighborhoods to use distributed, renewable power with far greater reliability;
- Support for electric vehicle deployment: utility provides substantial initial cost vouchers in exchange for customers allowing the utility to manage their charging.

 

This is an energy future that I support.  And one that we can have.  The technology exists.  The challenge is institutional.  As the Energy Future Coalition explained, our regulatory model is a "vestige of ...century old thinking", and our utilities are inherently "conservative" and "not innovators."  That is why we need our state regulators to lead.   

 

Typically, state regulators are reactive.  But we will not get to where we need to be if our regulators are reactive.  We need them to help forge the path to a different energy future, one that serves our residents so very much better.  That is why I have urged the Commission to initiate a proceeding that would explore "Utility 2.0", encourage a broader conversation among all stakeholders, and adopt a pilot in Montgomery County that can demonstrate the value of utility service appropriate for the 21st century.  You can see my request to the Commission and the Energy Future Coalition's report by clicking here.

Utility 2.0 Filing at Public Service Commission
As the Commission is poised to speed up reliability improvements and investments -- investments that will exceed $1 billion in Pepco's service territory alone -- it is critically important that we make sure that these investments will also help bring about a very different kind of utility, a utility that is more right for the 21st century, a utility system that we call "Utility 2.0". 

 

There is little doubt that our existing system -- the way in which the grid itself operates and the manner in which it is regulated -- are both sorely out of date.  It is sometimes said that if Alexander Graham Bell came back today he would not recognize a phone.  Not so if Thomas Edison came back.  He would look proudly on his work -- for it has changed so little.  That is not a good thing.  We need a new, reinvented system that would make Steve Jobs proud -- one where you, the customer, have far more control; a system that is more "decentralized" using "distributed" clean energy sources; a system that is far less wasteful economically and environmentally.

I was grateful that the Governor's reliability task force recognized that we need to act "boldly" to help bring about this new energy future, and literally tasked the Energy Future Coalition with the job of coming up with recommendations on how we could move in that direction.  Their work will be released any day now, and will set the stage for important conversations to follow.

In a filing I made with the Commission last week, I urged the Commission to open an investigation into "The Future of Maryland's Grid" and to assume the lead in bringing thought leaders from around the country to help us lay out a path towards a reinvented grid, which should include a close examination of the work of the Energy Future Coalition.  My hope is that Montgomery County and our state can assume a leadership role nationally in realizing the benefits of Utility 2.0.

"Mirco-grids" are thought by many to be at the very heart of Utility 2.0, and we know that they work, and we know that they work here in Montgomery County.  FDA has its own micro grid, and it has not lost power due to weather once since that grid was operationalized.  It uses cleaner energy, produces fewer carbon emissions, is 99.99 percent reliable, is more energy efficient, and it produces net revenue for the government by virtue of its capacity to sell power into the grid.  That is a future I am looking to see available more broadly, including at the neighborhood level.  



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