April 4, 2003
Ms. Felicia L. Greer
Executive Secretary
Public Service Commission of Maryland
William Donald Schaefer Tower
6 Saint Paul Street
Baltimore, Maryland 21202-6806
Re: Supplement 360 to P.S.C. Md. E-6 -- Rider 9 - Customer Billing and
Consumption Data Requests and Rider 24 - Load Response Program
(Ref. Number R-1776, Mail Log No. 87024)
Dear Ms. Greer:
The Baltimore Gas and Electric Company (“BGE” or “the Company”) filed
Supplement No. 360 to P.S.C. Md. E-6 of its Retail Electric Service Tariff on
February 27, 2003. This Supplement proposed the extension of BGE’s Load
Response Program under Rider 24 and the Energy Information Management (EIM)
Program under Rider 9 beyond their current June 1, 2003 expiration. The Company
also proposed revisions to the EIM program.
On March 31, 2003, the Company received a letter from the Commission with
the comments of the Staff attached.1 The Commission invited comments on Staff’s
analysis from all interested parties. BGE respectfully submits the comments herein.
The Company recommends that the Commission reject Staff’s recommended
action and approve the proposed tariff revisions as filed. The provision of data
services and load response services by BGE is in the broad public interest.
Continuation of these programs is also immediately in the interest of those customers
currently participating in the programs, and of additional customers likely to seek
such services in the future.
1
Staff indicated in its comments that it had requested supplemental information and that “As
of this writing, that information is not yet available.” BGE received a set of data requests from Staff
on March 14, 2003 and responded fully in writing on March 21, 2003. Thus, the requested
supplemental information has been provided to Staff.
Ms. Felicia L. Greer
Executive Secretary
April 4, 2003
Page 2
The Company will address each program in turn.
Rider 24 – Load Response Program
BGE proposes continuing Rider 24 with no changes to the program’s design.
BGE currently has 18 industrial and commercial customers registered in the
Pennsylvania-New Jersey-Maryland Interconnection (PJM) Economic Load Response
Program. These 18 customers represent a potential load reduction of 42.2 megawatts.
In the absence of the Load Response Program under Rider 24 by BGE, there
will be no alternative programs available to these or other customers from the
Company to enhance reliability and offer customers a load response option after July
1, 2004, because Rider 14 – Emergency Generation and Rider 16 – Curtailable
Service both terminate with the end of Price Freeze Service for commercial and
industrial customers. Prior to Electric Industry Restructuring, BGE could achieve a
peak load reduction of over 100 MWs from participants in these programs. BGE’s
offering of Rider 24 is one option available to allow customers to continue to react to
high prices in the market and capacity constraints on the PJM system by using on-site
generators to meet load requirements or by curtailing consumption on a voluntary and
economic basis.
Staff does not distinguish between Riders 9 and 24 in some of its comments.
Thus it might be unclear to the Commission whether Staff is suggesting that Rider 24
is being offered below cost. However, BGE does not understand Staff’s comments to
apply to Rider 24, because confidential data provided by BGE in the filing of
Supplement 360 clearly demonstrated that Rider 24 is not a “subsidized utility
service”, but instead makes a (small) return that is credited above-the-line.
Moreover, BGE’s expectation is that this program will be potentially more
valuable to participating customers and the Company in the future. The summer of
2002 provided limited financial incentives for load response due to the generally low
Ms. Felicia L. Greer
Executive Secretary
April 4, 2003
Page 3
Locational Marginal Prices (LMP) in PJM during the peak days. The chart below
shows the Average Monthly On-Peak LMP’s for the period from 1999 – 2002. It is
noteworthy that last summer’s electricity prices in PJM were substantially lower than
in 1999 and 2001.
Should high prices again arise in the PJM system, all customers will benefit to
the extent that load response programs are available to militate against the supply
constraints and the resulting high hourly prices. The participating customers in Rider
24 gain to the extent that they are paid 80% of the value of their load response. BGE
gains because it keeps 20% of the value of the customers’ load response, which
covers the minimal administrative costs for the program as well as generating an
additional return recorded to the benefit of all other customers.
The offering of Rider 24 is also consistent with the goals of customer choice.
As noted in BGE’s Retail Electric Service Tariff, participation in the Company’s
Load Response Program is available to both customers currently taking Standard
Offer Service – Price Freeze Service and customers with an electricity supplier other
than the Company.
The fundamental question is whether it is in the public interest to have as
many parties promoting load response options to customers as possible. BGE
believes that the answer is clearly YES! BGE offers a relatively generous share of the
benefits of load response at a current rate of 80% to customers. This should serve to
encourage many more customers to participate in the future, with potential gains to
BGE, to the participating customers, and to the general body of ratepayers.
Rider 9 – Energy Information Management
BGE is proposing a modified EIM program. The Company has terminated the
contract with its prior vendor effective March 28, 2003. The Company believes that
there is a continued need for frequent energy usage information by some of its
customers. The Company also expects this need to increase as more customers
participate in the competitive market, especially if the number of customers with
interval meters increases substantially, as would happen by July 2004 if the
Commission approves the proposed Settlement in Case No. 8908.
Therefore, the Company is proposing to offer a modified program by working
with a nationally recognized vendor currently used by BGE for metering services.
The program costs that BGE will incur are significantly lower than those under the
prior program and the charges to the customers are substantially less as well.
The provision of this data to customers at an overall minimal net cost is in the
public interest. Customers will pay for the information they need. With this access to
data, customers can better manage how they use electricity, can operate their facilities
more efficiently, will be better able to participate in load response programs (whether
Ms. Felicia L. Greer
Executive Secretary
April 4, 2003
Page 4
through BGE or with a third party) and will have more information available to
possibly help them contract with a competitive supplier. Higher charges to customers,
as Staff proposes as an alternative to canceling the program altogether, 2 would serve
to discourage program participation. Rather, the Company believes the small net cost
projected for the new program is justified, especially if providing this data facilitates
demand response participation and advances the development of the competitive
electric supply market.
The Company provides many services to customers at a net cost. For
example, Part A of Rider 9 provides that third party requests for consumption history
and interval load history are provided at no charge to customers. Although BGE
incurs costs to provide the data, the Commission has determined that the public
interest is best served by making such information available to customers at no
charge.
Similarly, although projected revenues fall slightly short of costs for the
revised Rider 9, this is a very small amount of money to implement a worthy program
that benefits customers. BGE believes there is an unmet need by customers for better
access to information. The Company will not be directly harmed if the Commission
terminates BGE’s EIM program. Rather, it is the customers who will be harmed, as
they may have to pay considerably more for the data or they may not be able to get
the data in a timely manner.
2 As an aside, Staff also provides a discussion about EDI infrastructure and correctly notes
that the General Technical Implementation Working Group did not adopt a “day one” implementation
of such electronic data transfer transactions. BGE believes that this discussion is better addressed in a
different forum and that it is not related to the instant filing. How data is transferred between the
utility and suppliers is a completely separate issue from the need by some customers for data services
like EIM.
Ms. Felicia L. Greer
Executive Secretary
April 4, 2003
Page 5
Summary
The continuation of BGE’s Rider 24 and the modified Rider 9 enhance
opportunities for customers to participate in Load Response Programs, whether
offered by BGE, other parties or directly to the customer through PJM. The revised
Energy Information Management program is a very simple, low cost program
addressing customer requests and providing data to facilitate load management. The
participation by any customer in Rider 24 and the EIM program is completely
optional. Accordingly, BGE requests that the Commission approve the continuation
of Rider 24 and the modified EIM program under Rider 9, without specific expiration
dates.
Sincerely,
Sheldon Switzer
Director
Electric Pricing and Tariffs
cc:
Settling Parties in Case Nos. 8794/8804
Settling Parties in Case No. 8849
Licensed Maryland Electric Suppliers