The Maryland Public Service Commission has rejected Baltimore Gas & Electric's proposal to deploy advanced energy meters to each its 1.2 million customers.

BG&E filed the proposal a year ago, which it said could save electric and gas customers in excess of $2.6 billion over the life of the project. The plan was estimated to cost a total of $835 million over the 15-year life of the meters, which BG&E sought to recover through bill surcharges that the commission had to approve. BGE received $200 million in federal stimulus grants through the U.S. Department of Energy, which would have decreased the cost of the initial five-year deployment.

But the commission said the proposal, in its current form, asked BG&E’s ratepayers to "take significant financial and technological risks and adapt to categorical changes in rate design, all in exchange for savings that are largely indirect, highly contingent and a long way off."

BG&E released a statement yesterday, which said "We’re shocked that the PSC is jeopardizing the $200 million stimulus grant awarded by the Department of Energy to help pay for the initiative. The decision also jeopardizes Maryland’s ability to meet the O’Malley Administration’s energy efficiency goals under EmPOWER Maryland."

The commission invited BG&E to submit a new proposal once certain issues were addressed as the proposal was not just a request for AMI deployment. "It also is a request to establish a customer surcharge for advance recovery of the costs of the proposal, thereby shifting all financial risk to BGE customers," the decision read. "The company seeks approval to recover those costs through a 'tracker' surcharge that would begin appearing on BGE bills for both gas and electric customers almost immediately upon the commission’s approval of the proposal, but before any of the infrastructure is installed or any benefits are realized."

BG&E is in danger of losing the DOE grant if it does not proceed with some kind of smart grid plan. In the meantime, the DOE has said it will work with BG&E to move forward.