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Smart meters may be installed for all Pepco and Baltimore Gas and Electric Co. customers within a few years, under orders issued by the Maryland Public Service Commission on Friday.

The commission acted in time for the utilities to secure hundreds of millions of dollars in federal grants to offset the costs. The commission had been considering a proposal from Pepco for smart meters, but had rejected a proposal from BGE that it was reconsidering after the utility revised its initial plan.

In its ruling on Pepco's request, the PSC said, "We recognize as well that ... components of this proposal provide an opportunity, at an opportune time, for Pepco to improve the reliability of its electric system."

Late Thursday, the commission ordered Pepco to appear before it on Tuesday to begin explaining why hundreds of thousands of its Maryland customers lost power for days a time after five severe storms between February and last week.

Pepco spokesman Bob Hainey said in an e-mail that the utility appreciated the PSC's approving its request for smart meters and is reviewing the terms of the approval.

BGE announced Monday that it would proceed with plans to implement smart metering systems.

The new technology has been touted for its ability to provide detailed information on energy use that customers and the utility could use to make choices that could save money.

Utility officials also say the meters, which can read usage remotely, would save the costs of having workers drive to customer locations to take readings and avoid the need to send customers estimated bills.

But critics have said that the potential payoff was unclear and the risk too high for consumers, who might be on the hook to pay more for years if savings did not accrue.

The PSC agreed and set conditions to ensure that building the advanced metering infrastructure would not cost ratepayers more than it saves them.

The Maryland Office of the People's Counsel, which represents ratepayers before the commission, had opposed making consumers pay in advance and assuring the utilities that their costs would be covered.

"We were able to achieve important protections, but will retain a healthy skepticism," People's Counsel Paula Carmody said Monday.

Rather than allowing an upfront surcharge to pay for the new apparatus, the PSC said the utilities would be allowed to recover its costs through rates, as has been customary. That method better ensures that the cost to ratepayers is closely tied to their benefit from the advanced equipment, the PSC said.

Critics also had opposed mandatory time-of-use rates, which would have charged customers more during peak use and were part of BGE's first proposal that the PSC denied.

The AARP said imposing those rates could be a hardship on people with medical needs and who might have no choice about when to use electricity, and customers with fixed, low incomes.

Time-of-use rates are not mandatory under the plans the commission approved.

AARP released a statement Friday praising the PSC decisions as a way to "move Maryland toward a more modern electrical grid, while continuing to protect the interests of consumers."

Further, the PSC said that if the system does not prove cost-effective, the commission would consider what cost recovery would be in the public interest. The commission also noted in its order that, according to BGE's own testimony, 15 of 26 utilities that are installing advanced metering infrastructure (AMI) are doing so without putting a surcharge on customers.

Pepco and BGE will have to present a detailed customer education plan to the commission for approval, and customers must get the information they need before smart meters are installed and before customers are affected by rates or programs tied to smart meter use, the PSC ordered.

The commission's order said it would hold regular reviews to hold the utilities accountable and make sure that the project is proceeding in the public interest.

And, the PSC said the utilities will need to work with the commission to resolve any remaining privacy and cyber-security concerns.

In California, where Pacific Gas & Electric has installed 4 million smart meters, some consumers contend the devices are tallying more energy than they are using.

Pepco's field test of 10,000 meters in Delaware has given the utility confidence that its meters are accurate, officials have said.

Some smart meters already have been installed in Bethesda and Washington, D.C., as part of a pilot project.