Utilities’ estimate inflates electric system planning costs, OPC tells regulators
BALTIMORE – A published Maryland utilities-provided estimate inflates by at least $25.5 million the costs of implementing regulations intended to promote transparent electric system planning, the Office of People’s Counsel told the Public Service Commission in comments filed yesterday.
“The utilities’ estimate inflates the costs of complying with new regulations that will benefit customers through more transparent electric system planning,” said Maryland People’s Counsel David S. Lapp. “The enhanced planning required under the proposed regulations will increase transparency, strengthen review of proposed spending and alternatives, enable beneficial competition for energy services, and help reduce long term costs and reliability risks through more disciplined planning.”
OPC’s comments address the utilities-provided $99.4 million cost impact estimate and accompanying explanatory language published in the Maryland Register alongside the proposed electric system planning regulations. The inflated cost estimate leaves the incorrect impression that electric system planning requires large rate increases, OPC said.
Following the utilities’ filing of their estimate, a Commissioner questioned whether the high estimate reflected utility resistance to distribution system planning and required a more detailed breakdown from each utility, OPC noted. Resulting cost breakdowns from each of the five participating utilities—Baltimore Gas and Electric, Potomac Electric Power Company, Delmarva Power & Light, The Potomac Edison Company, and Southern Maryland Electric Cooperative—showed that the published estimate included expensive new computer systems and software platforms used to monitor and coordinate distributed energy resources on the grid—even though the electric system planning regulations do not require utilities to buy or build those platforms. Rather than auditing every line item in the utilities’ full estimate, OPC focused on that portion of the published figure because it is a discrete cost driver that is plainly not required for compliance with the electric system planning regulations. OPC did not verify the rest of the estimate. Evaluating other cost categories would require more information than was available.
Even within that software-platform category, OPC’s filing noted that at least some of the work on computer systems reflected in the utilities’ estimate was already underway, and that in at least one instance related costs were already included in rates approved by the Commission, before the regulations were even issued. Baltimore Gas and Electric, for example, counted some computer systems costs already included in Commission-approved rates.
“OPC’s assessment of the cost estimates for computer systems shows that costs are overstated by at least 26 percent,” Lapp said. “We and many others have worked for years to strengthen electric system planning and rein in rising costs. The utilities’ inflated estimate is being used to cast doubt on reforms that are straightforward, legally required, and essential for transparency.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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