Maryland governor wants to swap earlier cost recovery for better reliability


By Jesse Berst

As we've been discussing for several weeks, performance-based regulation may be on the upswing even though smart grid regulatory clouds remain. Most recently, Maryland Governor Martin O'Malley says he wants regulators in his state to allow utilities to institute a surcharge for significant grid maintenance... but only in return for stricter reliability standards.

In a Washington Post article, O'Malley explained that "we all may pay another dollar or two a month on our utility bills, but it will accelerate the investments that will spare us from having to throw away 400 bucks' worth of food whenever a big event comes in."

Some of the money would be for grid modernization, but much of it would go to more "traditional" upkeep such as tree trimming and line burial. Under the governor's proposal, Maryland would tighten reliability standards for electric companies. It would also break with industry practice by measuring utilities’ performance during storms, not just when the weather is clear. The state would also tie rate-hike requests to records on reliability.

O'Malley may or not win this skirmish, which pits him against the Maryland Office of People’s Counsel, the AARP and many state legislators. But the trend seems clear. Increasingly, regulators want rate hikes tied to measurable performance metrics.

What do you think of Gov. O'Malley's chances? Use the Talk Back comment form below to weigh in.

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Jesse Berst is the founder and chief analyst of Smart Grid, the industry's oldest and largest smart grid site. A frequent keynoter at industry events in the U.S. and abroad, he also serves on advisory committees for Pacific Northwest National Laboratory and the Institute for Electric Efficiency. He often provides strategic consulting to large corporations and venture-backed startups. He is a member of the advisory boards of GridGlo and Calico Energy Services.