In a pivotal discussion at the Public Service Commission meeting on December 11, 2024, the Southern Maryland Electric Cooperative (SMECO) sought approval to retroactively bill KMC Thermal LLC for significant undercharges amounting to $158,444.62, stemming from a faulty current transformer. The undercharging issue dates back to October 5, 2022, and has raised questions about accountability and communication between the involved parties.

SMECO's request is based on a regulatory provision allowing utilities to recover undercharges that exceed 12 months, provided the customer was aware or should have been aware of the billing errors. SMECO argued that KMC, as a sophisticated power plant operator, should have recognized the discrepancies in their bills, especially after reporting low meter readings to Pepco in October 2022. However, SMECO's own investigation revealed that the faulty transformer, owned by Pepco, was not identified until August 2024, leading to a prolonged period of underbilling.

Commission staff recommended denying SMECO's request, asserting that KMC acted appropriately by notifying Pepco about the transformer issue. They concluded that KMC could not reasonably have known about the billing errors since they do not own the faulty equipment. The staff emphasized that the miscommunication primarily lay with Pepco, which mistakenly identified the transformer as customer-owned.

During the meeting, KMC's plant manager, Jerry Ramsey, confirmed that the company had been aware of the low readings but lacked the means to quantify the exact financial implications. This acknowledgment raised further questions among commissioners about KMC's responsibility in monitoring their billing situation.

As the commission deliberates on this matter, the outcome could set a precedent for how utilities handle billing discrepancies and customer accountability in Maryland. The decision will not only impact KMC's financial obligations but also influence the operational protocols of SMECO and Pepco moving forward.