The Potential Setback of the Smart Grid that is Being Pushed

Jose Antonio Vanderhorst-Silverio | Jun 29, 2010

        

All stakeholders need to be aware about the importance of this potential precedent. Under Kate Rowland’s article Smart grid's not-so-good week,posted in her Intelligent Utility Perspectives Blog, this post is a response to the third comment written by Larry Fisher 

 

Hi Larry,

 

Thank you for your continued contribution on this important generative dialogue.  

The Order No. 83410 is sending the very clear message to the general public that the Maryland PSC needs to fulfill its legal duties on a problem they seem unable to handle. That Order may involve a very smart move as (using your words) “the utility has been invited to re-submit its proposal in a way that shares risk between the utility and its consumers.” Thank you also for writing “…that other utilities looking to begin or expand smart grid implementations must take this into account.” The Order is in fact shifting that problem to BGE and utilities with a potential setback for the smart grid that is being pushed. 

To support that potential setback, my interpretation that utilities in general will no be able to handle such risky high tech projects is based on facts that I read on the Order itself, on a fact about the non-trivial knowledge of culture, and for example on the discussion under the commentary Smart Grid Culture War? Power Guys vs. Netheads.  

The non-trivial knowledge is based on the understanding that “cultural change is a slow process requiring constant attention and an obsession for detail and consistency.” (Daniel Robey, Designing Organizations). Instead of maintaining the cultural war, the EWPC-AF reorganizes the industry for Power Guys and Netheads to mutually reinforce each other. This reflects the fact that Power Guys will just not be able to shift their monopoly culture to become competitive Netheads anytime soon.

It could be that eventually in some states “the failure of the Maryland PSC to approve BGE's proposal invalidates the purpose and usefulness of public utilities commissions [update; on customer facing matters] [delete: in general] [update: except for the regulated transportation utility that will remain].” Maybe exceptionally state regulators will handle prudential regulations in some states. But those outcomes should be the result of each state legislature restructuring process, which normally include transitions for implementation. The ideal for the EWPC-AF based smart power service, with smart grids, and specially with smart customers, to be a seamless state/federal process to enable a federal retail (and wholesale) smart market.

 

A third option is thought under the assumption that BGE monopoly will be obeying.  However, it is a fact that in this case BGE’s starting point is not at all about obeying: the Order says that “In its filings with this Commission, BGE repeatedly has stated that cost recovery via a tracker mechanism is an ‘essential’ element of the Proposal, and that it will withdraw the Proposal if the tracker is not approved.” The tracker is meant to recover costs as they are incurred, not as rates that should reflect the benefits received by customers.For that reason, that third option may just be an illusion, to try to hide the potential setback of the smart grid that is being pushed.

 

Like the holiday that Roosevelt introduced to banking during the great depression, the EWPC-AF is a very simple change on energy policy with a large amount of ramifications. However, there are many parts that will remain in place, while many others will be changed during a transition period.

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