Energy-Efficiency Funds and Demand Response Programs, Maryland

Updated September 2008

Below you will find questions and answers regarding Maryland's utility energy efficiency programs, including options for load management, demand response, and distributed energy resources, and information about state-sponsored energy efficiency programs.

What public-purpose-funded energy efficiency programs are available in my state?

Maryland's electricity restructuring law, signed in 1999, mandated the creation of a Universal Service Fund that provides bill assistance and weatherization for low-income customers. Currently, no public purpose funded energy efficiency programs are available to federal customers.

What utility energy efficiency programs are available to me?

No commercial/industrial utility energy efficiency programs are currently available to federal customers. With the passage of the EmPOWER Maryland program, utilities are now required to develop energy-saving programs to decrease electricity consumption (three-year program plans were filed by the utilities in September, 2008). Some of these programs, expected to begin in 2009, may be available to federal customers.

What load management/demand response options are available to me?

The PJM Interconnection (PJM), a regional transmission organization (RTO), offers several demand response programs, three of which may be attractive to federal facilities:

The Economic Load Response program allows electricity users to provide load reductions in exchange for a payment based on hourly wholesale electricity prices. Participation is fully voluntary. Program participants have the choice of two options: the Real-Time or Day-Ahead Option. In the Real-Time Option, participants can decide at any time to provide load curtailments (with one hour notice to PJM), and receive payment based on the real-time electricity price (minus their retail rate for generation and transmission). In the Day-Ahead Option, participants submit load reduction bids (of at least 100 kW) into the day-ahead energy market. Participants whose bids are accepted are paid for their load reductions based upon the day-ahead, hourly electricity market prices (also with their generation and transmission rates subtracted). Reductions are figured based on a "customer baseline load" (CBL), essentially the average load levels for the same hours in four of the facility's previous non-responding days. Retail electricity customers can participate in the program through any existing PJM Member, such as their utility, a third-party electricity supplier, or a specialty "curtailment service provider" (CSP); they may also participate directly by becoming a "Special Member" of PJM. Regardless of which type of firm it is, the CSP will generally offer to split the revenues with the customer at a pre-determined percentage. Customers on real-time (hourly) electricity pricing can participate, but at much less attractive remuneration terms (since they are already exposed to market electricity rates).
The Emergency Load Response program (energy only) provides participants with a payment representing the marginal cost of power at the nearest hub on the PJM system (the locational marginal price, or "LMP") for providing load reductions when notified by PJM of a system emergency. Compliance with any load reduction request is voluntary; no penalties are assessed if a participant decides not to respond. Retail electricity customers may participate through any PJM Member (for example, their utility, third-party electricity provider, or an independent CSP) or directly, by registering as a Special Member with PJM. While the remuneration can be very high in an event, the emergency program is rarely called (only five times over the past three summers, and each time only in certain zones). However, emergency program customers may also participate in the economic program (above), as long as reductions are not credited toward both programs simultaneously.
PJM's Interruptible Load for Reliability (ILR) offering is an emergency "capacity" program in which participants pledge to either reduce their load by a specified amount (guaranteed load drop, GLD) or to a specific kW level (known as firm service level, FSL) within one or two hours of an event notification. Load reductions are mandatory and may occur up to ten times per year, lasting up to six hours per event. Penalties for non-compliance are substantial. Participants must register by March 2, 2009 (and should start sooner since registrations must be cleared by their third-party electricity providers and distribution utilities). Remuneration is based on the results of annual capacity auctions in various PJM regions, but ranges from about $40 to $80/kW (depending on the zone and year) through 2011-12. Most participants are also eligible to receive energy payments for actual reductions, if and when the program is called.

In all three programs, participants can provide load reductions either through curtailing electricity use or operating on-site generation consistent with local environmental regulations and permits.

Potomac Edison Company (doing business as Allegheny Power) offers the Economic Generation Buy-Back Rider (PDF 10 KB), which pays customers to voluntarily run onsite generation (3 MW minimum) for two or more hours during periods of high wholesale electricity prices. Payment is based on the difference between the average of the six 30-minute integrated demands preceding the curtailment period and the maximum 30-minute integrated demand during the customer's participation. Download Adobe Reader.

Under its Rider 24, Baltimore Gas & Electric offers two demand response options to federal customers:

BG&E's Economic Load Response program is very similar to PJM's program of the same name, with real-time and day-ahead options. Customers responding to BG&E's notification, either on a real-time (day-of) or day-ahead basis, receive 80% of the price that BG&E pays to PJM for their load reduction.
The Firm Capacity Incentive is a mandatory curtailment program that remunerates customers based on the prevailing market price for the pre-arranged amount of capacity they curtail.

BG&E's Hourly-Priced Service rate is a real-time pricing program whereby customers pay the company PJM's locational marginal price plus fixed adders for distribution, administration, etc. This rate is mandatory for customers over 600 kW who do not contract with a competitive electricity supplier.

What distributed energy resource options are available to me?

The Database of State Incentives for Renewable Energy (DSIRE) provides information on programs that offer incentives for renewable distributed generation. The following program may be of interest to federal customers:

The Maryland Solar Energy Grant Program offers $2,500 per kilowatt, up to $10,000 per grant, for commercial solar PV installations, and the lesser of $3,000 or 30% of equipment cost for solar water heating projects. Systems must have a capacity of 2 kW or above; PV systems can not exceed 20 kW.
The Maryland Geothermal Heat Pump Grant Program offers incentives for geothermal heat pump installations of $1,000 per ton, up to $10,000 per system. There is no limit on the capacity of these systems.
The Maryland Windswept Grant Program offers $2,500 per kW for small scale wind energy systems, up to $10,000 per system. Systems must have a capacity of 1.5 kW or greater.

Are there energy efficiency programs sponsored by state government?

No state government energy efficiency programs are currently available to federal customers.

In July 2008, Maryland passed legislation, creating the EmPOWER Maryland initiative and the Strategic Energy Investment Fund, which will substantially increase funding for energy efficiency and renewable energy investment in Maryland. These programs are expected to be rolled out in 2009. For information on these new opportunities, contact the Maryland Energy Administration.

What additional opportunities are available to me?

Federal customers also have energy efficiency opportunities available with utilities that have area-wide contracts with GSA (e.g., AGL Resources, BG&E, Delmarva Power & Light, PEPCO, Trigen Baltimore Energy, and Washington Gas Light) and, by extension, all other federal agencies. Federal facilities should contact their account executive to determine the level of participation by their local utility.