This story was corrected at 11:20 a.m. June 14. An explanation follows the story.
Some 5,000 Pepco customers with smart meters in Montgomery and Prince George's counties will have an opportunity to reduce their bills by using less electricity during designated peak periods from mid-July through Sept. 30.
Those customers — automatically enrolled in the program by the utility through permission of the Maryland Public Service Commission last week — will get a rebate of $1.25 per kilowatt hour for each kilowatt hour they cut electricity consumption below a baseline that the utility will calculate taking into account the customer's average high use during the previous 30 days.
The customers include 2,900 households in Fort Washington and 2,100 in Silver Spring and Takoma Park.
Called the "Peak Energy Savings Credit," the program is a form of "dynamic pricing" tied to the use of smart meters. The smart meters use radio waves to transmit data from the meter to the utility.
About 214,000 Maryland Pepco customers have the advanced meters installed now, and all of the utility’s Maryland customers — totaling 308,934 in Montgomery and 225,657 in Prince George's — are expected to have them by the end of the year, Pepco spokeswoman Myra Oppel said.
Customers in the first phase of the rebate program will receive information about it in the mail within a few weeks, said Stephen Sunderhauf, manager of program design and evaluation for Pepco Holdings, the utility's parent company. The customers will be asked to select how they want to be notified of peak events, which are based on weather forecasts, energy prices and system constraints.
Both paper and online account statements will show customers the rebate they earned, Sunderhauf said.
Pepco plans to have dynamic pricing extended to all Maryland residential customers by June 2013, he said. That is when the utility also plans to have a similar program for small commercial customers.
Smart meters have been touted for their ability to improve outage detection, make restoring service easier and cut labor and travel costs by virtually eliminating the need for in-person meter reading.
Opponents of the devices say they worry about health effects of radio waves, privacy invasion and costs that ratepayers might have to bear.
Pepco executives said the data is encrypted and not personally identifiable.
Low-level radiation that the devices emit cannot break molecular bonds to hurt people, a health physicist who was called by the utility to testify told the Public Service Commission.
The PSC has asked for additional information about the feasibility of transmitting data via alternatives such as secure telephone lines.
Until the commission decides whether customers can choose not to have smart meters installed, they may delay meter installation or have the meter's transmitter disabled by notifying the utility in writing, commissioners decided in an interim ruling last month.
Pepco has changed the name of its dynamic pricing program to Peak Energy Savings Credit.