Dayton Power & Light: an exception worth considering

DP&L, without stimulus grant, has held back on smart meters

Phil Carson | Mar 26, 2012

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We've run a zillion columns on interval meters—the utilities deploying them and their roadmaps, the citizens receiving or awaiting benefits, the citizens mobilizing against them.

In this sometimes over-heated context, it may be instructive to consider the case of Dayton Power and Light, which actually took some local heat last year for not deploying "smart" meters. I point out this seeming anomaly because it stands apart from the usual media coverage trend the power industry has witnessed over the past two years.

Let me clarify here that that DP&L's story is not "news" in the sense that the milestones all took place about this time last year. But DP&L's situation had always stuck in my mind without moving me to write about it. I hereby correct that omission by simply setting out some facts before our readers for what they're worth to the industry discussion. 

Among Ohio's utilities, Duke Energy of Ohio and AEP Ohio have been deploying advanced metering infrastructure and FirstEnergy Corp. has embarked on related pilot projects. Duke was awarded $200 million in smart grid investment grants for its work in Ohio and four other states. AEP Ohio won $75 million for its work. FirstEnergy won a $57.4 million investment grant for its work in Ohio and Pennsylvania.

DP&L serves about 500,000 electricity customers in a 6,000-square mile territory. By late 2008, DP&L had developed a plan in tandem with its Public Utility Commission of Ohio (PUCO) to deploy advanced metering infrastructure (AMI), distribution and substation automation and other advancements enabling demand response and customers' energy management. The initial plan called for a budget of $297 million in capital and $186 million over seven years in operations and maintenance. DP&L sought a stimulus grant of $145 million but, for whatever reason, it did not win that grant.

In late 2010, without a matching grant in hand, DP&L asked the PUCO if it could withdraw its smart grid plan and the PUCO assented. In early 2011, a severe winter storm struck the Dayton area. 

The local media response might have been a smart meter vendor's dream. "DP&L Only Ohio Power Company to Delay 'Smart Meter' Upgrades," stated the Dayton Daily News on Feb. 5, 2011. The newspaper's response clearly took an angle quite favorable to advanced metering.

"Dayton Power & Light is the only major Ohio electric utility that isn't rolling out digital 'smart meters' that can reduce the duration of outages during storms such as the one last week that knocked out power to tens of thousands of local residents," wrote Tom Beyerlein, a reporter.

"The meters improve response times by automatically pinpointing where outages occur," Beyerlein continued. "The Public Utilities Commission of Ohio last month approved DP&L's withdrawal of a $370 million, 10-year plan to create the so-called smart grid here. The project was designed to improve reliability, help customers manage their energy use and costs and make it easier to integrate renewable energy sources such as wind and solar into the grid."

DP&L spokeswoman Lesley Sprigg pointed out that customers in other markets had objected to smart meters based on the basis of cost and privacy issues.

"There is a lot of outcry," she told the Dayton Daily News. "Customers are concerned about it and don't want to pay for it."

The upshot is that DP&L could see the benefits of grid modernization, but the financial numbers did not make sense without a stimulus grant. Though aware of the virtues, this utility maintained its sense of financial restraint and did not plunge its investors and ratepayers into a program it could not justify financially. Publicly, the utility made a virtue of necessity.

DP&L's restraint is not as anomalous as it might seem. My hunch is that many utilities have held back, awaiting the outcomes from the stimulus-funded pilot projects and deployments now underway. We all know there are myriad issues—politically, financially and technically—inherent in grid modernization. To say that the political, financial and technical landscape remains in flux would be an understatement. In DP&L's case, a go-slow approach may end up paying as many dividends as an immediate leap into the deep end of the pool.

First, being taken to task for not deploying advanced metering and extolling the virtues of those meters' contribution to outage restoration is refreshing, if premature. That's because the issue of whether AMI can actually contribute to less frequent, shorter duration outages remains under-documented. In the case of isolated or nested outages, the connection would seem to be clear. In the case of major storms, where largely manual restoration is needed due to tree-related damage, I believe the jury remains out. Second, credit is due to DP&L, which has shown due diligence in considering the benefits of AMI while tempering any enthusiasm to follow the crowd by exercising financial restraint. Lastly, given the power industry and media dynamics cited at the beginning of this column, here is a counter-example that simply offers a refreshing thread in the continuing saga of grid modernization.

As usual, your comments are welcome. Apart from the man-bites-dog nature of the DP&L story (that is, a simple reversal of the expected), I'm interested to know how the discussion of the role of AMI in storm-related outages has gone. Is anyone aware of credible studies on this topic? Let me know.

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757

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Comments

Dayton Press Lagging Dayton P&L

Great article Phil! This is a case of the media being behind the utility, which may be the appropriate lede, as its usually the other way around, with the conservative utility being nagged by progressive articles in the press. Reading this article, I remarked on the relative lack of context displayed by the reporter who took the easy road by comparing Dayton P&L to area utilities on the basis of AMI penetration. The jury is still out on the value of AMI - it remains an individual utility decision, determined on a case-by-case basis, and by all accounts it appears that Dayton P&L made a rational determination on AMI based on the numbers and relative value.

What Dayton and countless other utilities have learned in the past two years of high activity in Smart Grid is that Smart Grid need not equal Smart Meters. In fact, any number of utilities are focusing more and more on distribution automation and other projects to modernize their grids, eschewing the "follow the pack" mentality of engaging in a smart meter project. In the coming months, watch for consumer programs and energy services to gain more steam as distributed energy projects encroach on utilities and they recognize the need to pursue business models that go beyond commodity kWh provisioning.

John Cooper, Partner, NextWatt Solutions