What's in Your Meter? Part 2

Searching for the Truth about Electrical Power Rate Schedules

Thru the spring and summer of 2006 the media reported warnings from the public and private electric power players in Maryland and the District of Columbia of sizable pending rate schedule increases. Theses messages, spoken in the post “Electric Choice and Competition Act” language, blended statistical riddles, percentage metaphors and blame deflection. It avoided each customer’s obvious question “Exactly what will I pay each month under the new rates?” The crafted non-answer rivaled the clarity and trust level of “What will it cost?” responses from car salesmen and telecommunications and cable telemarketers.

Public communications from PSCs and the power companies avoided discussing specifics meaningful to individual customers. “The message”, while showing blameless remorse for the steep increases in the price of electricity, pointed out that electricity cost still compares favorable to inflation of nature gas, fuel oil and gasoline.

To customers interested in what rate changes means to their pocket book these arguments give no comfort, normally are presented only by the guilty and in the case of comparison of inflation rates of other energy products is not accurate.

When comparing price and value when an existing vendor raises prices, including electricity, you compare the existing and proposed charges to other customer’s charges and proposals from other qualified vendors. Understanding, analyzing and comparing electrical power pricing and make it meaningful to individual customers is a dilemma complicated by 4 factors:

1.Prices to customers are determined by a century old rate classification system unique to each power company within each political jurisdiction. There are from 14 to 20 different rate schedules varying by jurisdiction and power company that establishes the pecking order of pricing among residential, commercial, industrial, rapid transit, street lights, traffic signals, telecommuting networks, power production, electric vehicles, railroads and in Virginia church customers.
2.The electrical power enabling legislation varies from jurisdiction to jurisdiction.
3.The rules and guidelines established by each jurisdiction regulatory agencies to implement electrical power policy of its jurisdiction differ.
4.Spanning a period from 1999 to 2011 each jurisdiction and electrical power company within each jurisdiction has differing plans, time schedules and approaches to transition to a competitive wholesale and retail competitive market for its customers.

To solve this dilemma a test group was recruited consisting of 5 commercial and residential customers of electricity located in 3 different political jurisdiction buying electrical power from 3 different power companies.The 5 test group electric power customers were:

My own home in Montgomery Village, Md., receiving power from Pepco Maryland, My wife’s reaction was somewhat guarded. She gave me that puzzled stare that means “Why are you spending time doing this? There are a number of delinquent house hold assignments and is this latest adventure of yours going to increase our household income so we can pay for our electrical bill?”

The family homes of two of my sons. One lives in Vienna, Virginia and receives power from Virginia Dominion Power and the other lives in Howard County, Maryland receiving electrical power from Baltimore Gas and Electric Power. Their reaction was normal towards an aging parent. “What do you want to do again? You’ve got too much time on you hands. What happen to you last project?”

Fortunately, I received full cooperation from both daughter-in-laws, without whom, neither of my sons would be able to function beyond adolescent level in any aspect of their domestic lives.

The office space I rent in Montgomery Village, Maryland. My landlord wanted to know if I was thinking of leaving.

The shared electrical cost paid for Imogene Maria Wright’s unit in CGC. She is a CGC board member and Secretary and needed the information pronto. No hesitation on her part.

Using an excel spreadsheet:

1.The actual cost of each of the test group from April 2003 to March 2006 was compared to the anticipated cost from April 2006 to May 2007.
2.Calculations were made as to what the 3 residential customers would pay from April 2006 to June 2007 buying electrical power from the other power companies in the other jurisdictions in the region.
3.Competitively bid each test customer’s history of usage with all alternative electrical suppliers currently offerings programs for their rate class.
4.Comparisons were made over time by jurisdiction, Power Company, rate class, person, square footage, kilowatt hour cost using existing, proposed and competitively priced rate schedules.

What Did We Learn About the Mysteries of Electrical Power Costing?


The rate classification establishes the pecking order of pricing among the various residential, commercial and industrial customers. Based on the test group Pepco charges to its Maryland customers, 12.9 center per kWh for residential class, 17.5 cents for small commercial class and 15.7 cents for shared condominium, general service class.
The political jurisdiction In addition to the differences in rate class from jurisdiction to jurisdiction, power companies transition to a competitive retail electrical commodity market has a significant impact. Each state’s enabling legislation and the guidelines set by its regulatory commissions determines the retail cost of electricity at each stage of its plan. Residential class customers in the region are currently paying Maryland Pepco 12.9 cents, Maryland BG&E 14.0 cents, District of Columbia Pepco 11.3 cents and Virginia Dominion Power 8.6 cents per kilowatt hour. .
The size and construction of your home The core electrical components such as equipment and appliances are generally the same for each home and the incremental kWh usage based on size and people is small. This is particularly true of heating and air condition equipment, hot water heaters and kitchen appliances.
User Sq ft kWh KWh/Sq Ft Shared use units
Town home 2,212 24,934 11 1
Office 1,050 15,960 15 1
Condominium owner 995 6,899 7 264

The insulation effectiveness and protection measures taken against water and air infiltration of the outside building envelope structure of your home including windows, doors and roofs are key construction and maintenance energy conservation factors for all homes.

The equipment and appliance that you use Household electrical equipment can be divided into 4 categories: 1. Lighting, 2. Heating, air conditioning and hot water heating equipment, 3. Kitchen appliances and cooking equipment and
4. Computer and entertainment toys and stuff.

Think what you have in your home in each of these categories and what you can do to conserve energy and reduce cost.

A couple years ago, my wife preformed a much need interior redecorated featuring an impressive lighting make-over. It included a breath taking ensemble of multi bulb decorative, recessed, dimmer switched, indoor, out door, spot, flood light fixtures and chandeliers. Our inventory requirements for light bulbs are second only to that of the local neighborhood hardware store.

Despite efficiency and energy saving advances in every aspect of household electrical equipment and appliances it is generally more cost effective to use an alternate source of power to cook, heat hot water, air condition and/or heat your home.

In our garage are a freezer and an additional refrigerator full of every favorite food and drink of each one of our children and grandchild just in case. From time to time, because of a tripped circuit breaker, an electrical outage in the neighborhood or if I didn’t close the door hard enough, these appliances defrost and when discovered, have to be placed on “Quick Freeze Mode”. When this happens you can actually hear the rapid spinning noises of the Pepco meter coming from the meter room during the 2 day recovery period.

In recent years designer circuit breaker accessories appear when room furniture and entertainment features are added or upgraded. Resting on a bed of tangled wires sprinkled with encrusted dust ball, they bundle together multi prong electrical outlets as well as cable, telephone and television connections. We now have at lease one in every room in the house and as of yesterday there is not one vacant connection. (Are these circuit breakers a symbol of the “expanding electric power applications and uses that honors the culture of unrestraint consumer appetites and entitlements” referenced earlier?)

This summer our gas grill rusted to death and we bought a George Foreman electric grill. Grilling with George Foreman has averaged one circuit break reset per plate serving.

Rounding out the inventory of conspicuous consumption for 2 people, a dog and cat, we have 4 televisions (multiple use not uncommon in the evening, week ends, for major or home team sporting events and conflicting choice stand offs. The bedroom TV is tuned to Animal Plant during the week days for the dog’s pleasure and cognitive development), 2 DVD players we don’t know how to operate, 2 stereo systems that do not work and one computer on 24x7.

The extend of shared use The air conditioning equipment at Castle Gardens Condominium services 264 unit homeowners while the town home and office in Montgomery Village each have one heating and air condition unit that make up a significant percentage of their total electrical usage. Electrical efficiency as measured by kWh per square footage is 50 to 60% better when shared use of heating and air conditioning power systems is used. However, the trends in electrical rate tariffs and commercial development are away the more efficient shared use utility systems.

The other shared use measurement is the number of people using the home or office.

User # of people kWh per Cost per person
Montgomery Village TH 2 12,467 $1,496
Vienna SFH 5 4,494 $394
Clarksville SFH 4 8,608 $1,122
Montgomery Village Office 3 5,320 $862
Adelphi shared condo unit 1.4 4,928 $646

Behavioral habits learned growing up and individual day to day choices made have the greatest effect on the use and cost of electricity in most households. Take an inventory of unit quantities and use for each of the 4 electrical use categories. What kind, condition and quantities of light fixtures, heating and air conditioning, hot water heating cooking equipment and kitchen and laundry appliances are in your home? How often and how long are each unit running, used and on? Think about their efficiency, care and upkeep. Then remember what you learned growing up about closing door and windows, turning off lights and setting thermostats. Figure out what each category is costing you each day, week, month and year by person. With all others in the household set up rules that alter behavior patterns and creates better habits. Energy conservation is a continuing process so over time make fundamental changes as appropriate to the units in the 4 use categories and the building envelop of you home. Keep score and hold household members and yourself accountable.

We share the utility meter closet with our attached neighbor Jack. Retired on a fixed income, Jack subscribes to none of convenient or status redundancies, habits or use patterns practiced by his next door neighbor. Our electrical billing meters are side by side, with only the essentials operating at reasonable minimums in my home I’ve watched more than once my meter registering at a rapid rate while Jack’s meter moves as frequently as our aging hound dog.

Don’t Take My Word for It, Take the “What’s in Your Meter?” Challenge

The importance of electrical power Putting aside the power of nature , the human spirit and the spiritual forces of good and evil, all of which we have limited power to influence and control, it can be argued that electricity is the most powerful force that public policy and the collective energies of man can influence for the collective good.

Other than water, air, food and love, in our daily lives mankind what resource are we more dependent on electricity or fossil fuels? The continuing challenge is how we, the consuming and voting public, the power industry and government; can best manage, conserve, use and govern this important and depend resource.

Questions about electrical power Electricity as it applies to each of us can be defined by a bundle of questions, curiosities and concerns such as:

1. What am I paying and what can I expect to pay in the future for electrical power?
2. Why are some experiencing such steep increases in the cost of electricity and not others?
3. What is electrical power competition and how does it affect me?
4. What are the underlining mysteries of electrical power costing?
5. What is the condition and performance capability of the electrical distribution, generation and transmission infrastructures that provides my electrical power?
6. Is the electrical rate tariff system fare, equitable and competently managed?
7. How can public policy decisions positively affect our collective behavior to bring about energy efficiency and conservation?
8. In both the short and long run how can my family wisely conserve and use electricity?
9. How good a job are the elected officials that represent me doing in determining, implementing and monitoring electrical energy policy?

Finding your answers To find out the answers, don’t take my word for it? Like the 5 test electrical power customers, take the “What’s in your meter?” challenge.

All you need is access to the internet, Microsoft Excel and Word programs installed on your computer and your history of kilowatt hour (kWh) usage and the total electrical charges from April 2003. Log on to www.s24c.com/bills.doc for details and instructions. Once you have gathered together your historical information log on to www.s24c.kwh.xls to take “The challenge”.

If you are hesitant or unsure, make it an assignment for one of your computer addicted dependent children. Have them prepare a household budget recommending life style changes to reduce and conserve household electricity instead of eliminating their cell phone, transportation, clothing, vacation and entertainment entitlements. Send out an “E-mail alert” for help to those on your “bad joke” e-mail list. E-mail them this newsletter and ask for assistance. Heaven knows how many “Experts on all Matters” and “Computer Geniuses” are on that list.

It is particularly important that Maryland State elected officials take “the Challenge”. If too busy with the upcoming elections delegate to a staff member, campaign worker or ask constituents to take “The Challenge” and advise before the upcoming election on energy policy positions.

What's in Your Meter?

What's in Your Meter?
An Open Letter to Members of the Maryland General Assembly
By trade I am a property manager. For the past 38 years, in a variety of capacities, I have been responsible to property owners for the management and operations of large-scale commercial and residential facilities including energy and utility systems.

A property manager’s job is similar to that of a public official or a journalist. To apply our craft we must know something fundamental about everything that matters in our job while creatively “thinking outside of the box”. However, let us not forget that whether we manage properties for others, establish public policy or write a news breaking story the devil is in the details. To do our duty, for each assignment, we best explore in depth below our thin facade of understanding. Otherwise we will only dig ourselves into a potentially fatal hole.

Since the spring of this year, a priority assignment of mine, has been to understand the new economics of electrical power since the advent of a competitive electrical commodity market. My specific task was to accurately determine the annual cost of electricity for my Condominium Association and Cooperative customers in Montgomery and Prince George counties. Properly preformed each board of directors could confidently approve their annual budgets and establish assessment levels through and beyond 2007.

In completing this task I discovered more than just the devil beneath the surface of Pepco’s electrical rate schedules. I became aware that electrical power generation, transmission and distribution in the Baltimore-Washington region is a synergy and harmony conceived from 4 emerging forces:

1. The supply and demand market for electrical power over a period of time.
2. Decisions by elected public officials that determine, implement and monitor public policy.
3. Guidelines, rules and decisions by responsible state regulator agencies that implement public energy policy.
4. Response, behavior and performance by electric power utility companies to 1, 2 and 3.

I. The Market for electrical power is at a critical crossroad in time and is influenced by five (5) electrical power supply and demand market forces:
1. The growth of electrical power demand and dependency fueled by world and regional demographic trends, expanding electric power applications and uses that honors the culture of unrestraint consumer appetites and entitlements.
2. The fragile fault line between exponential increasing electrical power demands and dwindling energy resources.
3. The changing nature and architecture of global and national power distribution and generation structures.
4, The bifurcation of local electrical power delivery and generation and resultant competitive wholesale and retail energy commodity markets.
5. World events that threaten the future, security and safety of energy sources and resources as well as world population, natural resources and environment.

II. Decisions made by Maryland elected officials in the spring and summer of 2006 will have lasting impact on the success or failure of that State’s transition to a viable competitive electrical commodity market. However, as viewed in Maryland’s public stage, only two factors dominated electrical power policy deliberations over the past 3 ½ years.
One, control of the Maryland’s Public Service Commission and two, a singular focus on a July 1, 2006 electrical rate schedule offering by the Public Service Commission of a 72.1% increase in rate schedules to Baltimore Gas & Electric (BG&E) residential electrical power customers.

The response, divided by political party affiliation, was to fire, appoint and replace PSC staff and commissions and pass legislative affecting only BG&E for failing a percentage change litmus test.

Each electrical power service area in the Maryland Washington D.C. metropolitan region is in differing stages in their market competition and price stabilization plans. Each state’s enabling legislation and the guidelines set by its regulatory commissions determines the retail cost of electricity at each stage of its plan.
Using an inappropriate performance evaluation criterion on BG&E and not Allegheny Power, Delmarva Power or Pepco, the Maryland General Assembly passed harsh economic retribution on BG&E. Its only offense was to follow the legislative and regulatory mandates under the supervision of the PSC to implement its current residential electrical rate tariff schedules.
From 2003 to 2007 the percentage change of average kilowatt hour charges for residential homeowners, ranged from 7.5% to 132.2% in the Baltimore – Washington D.C. metropolitan region. Are not the others also guilty?

III. Public Service Commissions The Public Service Commission at least in Maryland is in need of fundamental reform. The collective paradigm, organizational structure and day to day routine are not much different than when it was first organized in 1907. Examples are the PSC’s record of presiding over the transition to a completive retail electrical market and its stewardship of the electric rate tariff structure.

A. Open Market Price Competition A robust fully competitive market can be a reality with an alignment of the following stars:
 The wholesale market prices for electrical commodities approach and/or equal the “Price to Compare” currently being charged.
 The Public Service Commission has recruited an energized roster of Alternate Electrical Power Suppliers, also referred to as Energy Service Companies (ESCO), for each and every rate class each of which have in place accessible user friendly competitive programs.
 The local power- PSC partnership have established a customer friendly ESCO selection system comparable to buying and selling over e-bay; shopping on line for airline tickets, mortgage refinancing, cars, books and records as well as shopping on-line, over the phone or in person from your favorite retailer.
District of Columbia Pepco is on the margin of retail competitive commodity power market for its residential customers. However, there are no with competitive offerings from alternate electrical suppliers for its residential or small commercial customers or workable system of alternate supplier bidding, selecting or contracting.

Pepco Maryland “Price to Compare” charges are well within the range of the retail generation market. As in the District of Columbia, Pepco Maryland does not have in place any viable pricing programs for residential and small commercial customers nor has the Pepco-MD PSC team established any workable buyer friendly system where residential and small commercial customers can select an ESCO.

BG&E Maryland has also reached a competitive market for its residential customers. Currently, BG&E residential customers can choose from 7 ESCO’s offering competitive bids savings equal to 3% to 11.5% off of the July 1st 2006 rate schedule. However, like Pepco Maryland and District of Columbia customers a workable alternate supplier selection program does not exist.
The July 1st “Price to Compare” (generation and transmission) electrical commodity charges to BG&E residential customers for cost will not change or be affected by recent legislation passed by the Maryland General Assembly. As a result of the legislation all BGE residential customers will automatically enrolled and participate in this Rate Stabilization Plan.

Residential customers will receive a per kilowatt hour credit of 4.577 cents in the summer and 5.052 cents the rest of the year applied to the distribution portion of the bill whether or not a customer selects an alternate supplier. This legislation does not preclude BG&E residential customers from selecting any one of the 7 alternate suppliers offering competitive saving plans.

Dominion Virginia Although Virginia has a number of competitive service providers licensed and registered none are able to offer competitive pricing as steep increases in wholesale power cost continue to prevent additional alternative suppliers into Virginia’s retail generation market. Dominion Virginia customers, through a telephone call to a Dominion’s customer service representative or by logging on to http://www.dom.com/ website can be connected to a “Price to Compare” shopping system of price bidding and ESCO selection.

B. Electrical Tariff Structure The electric rate classification system is economic class system that through its rate tariff deliberations taxes and charges customers for electrical usage. The electric rate class system was originally based on a logical, understandable and fair system that serviced and benefited both the public good and public utilities. In the 80’s and early 90’s rate structure system encouraged and rewarded reduced energy usage from season to season and during peak use periods during the day. Rebates and incentive plans fueled replacement of antiquated, inefficient and environmentally unsound power generation and distribution systems; heating and air conditioning equipment; kitchen appliances and lighting systems.

However, a class system, whether it is social, political or, economic is an artificial pecking order of groups and or individuals. If such as system is to succeed it must be principled based, designed for the public good, with public supported mission, goals and purpose. If not eventually the organization will corrupt and become impotent. That is what is rapidly happening to the electric rate tariff structures.

The allocation of costs and charge appears to be arbitrary manipulated in defiance of long standing principled tariff systems to camouflage, justify and deflect responsibility for steep increases in power supply charges. Under the banner of a competitive electric power market, no longer are there standards of local customer service and electrical power delivery or concern for capability, capacity and condition of the local distribution infrastructures embedded into the tariff logic.

Energy conservations and incentive rebate programs have been removed from the public service partnership rate tariff principles and now found in the self help publications under public relations. The once fair and logical pricing system erodes as the electrical share cost per kilowatt hour of a multi family housing and small commercial customers buying electrical power from Maryland Pepco will pay 36% more than a residential customer on the Residential rate schedule.

IV. Power Companies Responses There is a strange and guarded language embedded into electric power companies’ official announcements about proposed rate changes. While not inaccurate, Pepco and BG&E and respective Public Service Commissions only reveal percentage changes ranges from current to propose schedules, a practice that only breeds confusion, misinformation and distrust.

There is a noticeable absence of user-friendly websites or knowledgeable, empathetic and trained customer phone representatives standing by to relieve the shock of steep rate increases. Nor is there offer of effective tools, resources or ideas that will prepare and protect customers before their summer substitute mail person connects them to Pepco with more than just electrical power.

BG&E displays a public arrogance, air of superiority and rigorousness not uncommon among powerful industrial members in our increasing oligopolistic world economies. This public persona creates barriers to public trust, connected communications and effective customer service. Arrogance and defective communications aside BG&E, (public PCS statements to the contrary), is the first and only electrical power company to reach a competitive commodity market for its residential customers in the region.

BG&E following the mandated legislation and regulatory guidelines stumbled first over the finish line to a competitive retail residential electrical supply market in the region. Unfortunate for BG&E the Maryland General Assembly moved the finish line to the edge of the cliff.

It seems that none of the players in Maryland’s electrical power game explored in any depth the devil’s details before appearing on Maryland’s public power stage. I am remained of the words of the great philosopher Pogo “We have met the enemy and they are us!”
Very truly yours,

Arthur W. Hiban
Certified Property Manager (CPM)
Professional Community Association Manager (PCAM)