Electric Utilities Told to Draft Conservation Plans

By Lisa Rein
Washington Post Staff Writer
Tuesday, November 11, 2008

Maryland regulators have ordered the state's electric utilities to come up with proposals by Dec. 1 to conserve power to prevent the rolling blackouts that customers could face by 2011.

The Public Service Commission also is exploring a program to entice hospitals, farmers, municipalities and other energy users with backup generators to fire them up on high-demand, hot summer days to relieve pressure on the congested mid-Atlantic power grid.

In an order issued last week, the commission expressed doubt that transmission lines planned through and around Maryland will be ready by 2011 to carry more electricity to the state. Regulators in Virginia and West Virginia have given their blessing to a 250-mile power line proposed through rural Northern Virginia, but the project has not been approved by Pennsylvania officials, who could scuttle it.

"Unless new transmission projects are in service, the [electricity] committed for delivery in 2011-12 leaves a regional, peak demand shortfall that we cannot ignore," the order states. "If we fail to undertake some combination of finding or building new electricity generation . . . or reducing consumption, the very real threat of rolling blackouts or brownouts will remain."

In a speech to county officials in Ocean City in August, Gov. Martin O'Malley (D) threatened to force Maryland's four electric utility companies to build power plants if they do not find ways to increase supply. The four companies are still regulated, unlike wholesale energy companies.

But the commission is holding off on that threat for now, instead requiring Pepco, Baltimore Gas and Electric and two smaller utilities to plan programs to encourage customers to use less power during peak periods. Energy experts call these "demand-response plans." For example, energy-guzzling air conditioners can be powered down when customers are not home.

"It's about dialing it down during the peaks," PSC Chairman Douglas Nazarian said. "You tell the utility to turn off your power source."

If customers use less power, utilities need to buy less of it on the wholesale market, reducing the need to increase supply.

Maryland faces an estimated shortfall of 600 to 700 megawatts, the output of slightly more than one power plant, Nazarian said. No plants have been built in the state in two decades, the result of new environmental laws and deregulation, which has discouraged investment.

Pepco spokesman Bob Hainey said the utility, which serves the District and Montgomery County, is "reviewing the order and will respond accordingly." Starting next year, Pepco will offer customers devices that power down air conditioners during peak times; it is unclear whether the program would reduce demand enough to satisfy state regulators.

The commission also directed its staff to propose a system for distributing electricity generation among hundreds of small commercial customers at peak times to release pressure on the grid. By firing up backup generators, participating institutions, such as hospitals and universities, would take themselves off the regional grid, operated by Pennsylvania-based PJM Interconnection. Participants would receive compensation, Nazarian said.

© 2008 The Washington Post Company