Baltimore Gas & Electric (BGE), one of the largest providers of electricity in the state of Maryland, begins a 3-year project this month to install smart meters in customers’ homes.

Beginning in Anne Arundel County, BGE will begin to slowly replace 1.3 analog electric meters with digital meters capable of sending detailed energy usage information via a secure network between a customer’s home and the utility. The phased project will continue in Baltimore and Howard Counties in the fall, then move to the Harford and Carroll County service area next year. BGE plans to complete the smart meter installations by 2014.

Another local utility, Pepco, has already begun smart meter installations in the Washington, DC area.

In a statement to The Baltimore Sun, BGE vice president of strategy and regulatory affairs Mark D. Case said that the company believes this is “the most transformational change in the electricity grid in the last 100 years.”

The utility is required by state energy regulators to bare the cost of the smart meter updates; BGE is forbidden to use rate hikes to cover the project until at least 2015 when a rate increase–spread over a 10-year period–would have to be reviewed and approved. BGE estimates that if that rate increase is approved at that time, consumers would see an additional $1.10 added to their monthly electric or gas bill.

BGE is spending nearly $500 million on the smart meter upgrades, and another $66 million educating the public on what exactly the smart meters will–and will not–do. The utility is quick to point out that a “new or upgraded meter will not immediately provide benefit upon installation.” Rather, once more smart meters in the state come online over the next several months, customers will be able to utilize energy budgeting and tracking online among other features by the end of the year.

The company adds that even more benefits will come about in 2013, including special “smart energy pricing programs” and peak event reporting and online notifications, presumably to encourage energy conservation during peak demand hours when the burden on the grid is the greatest.

The smart meter installation project is not without controversy, however: consumers complain that there is no option to not participate in the upgrade. Some consumers are particularly concerned about loss of privacy as private information about energy usage is transmitted to and from the utility. And in some cases, consumers are concerned that the meters, which transmit data via radio waves, are a potential health risk.

In order to consider the need for an opt-out provision, the Maryland Public Service Commission (PSC) will have a hearing on May 22nd about whether or not consumers are entitled to choose not to participate in the smart meter upgrade.

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