Smart grid resistance

Consumers and regulators turn up the heat on utilities

Published In: Intelligent Utility Magazine September/October 2010

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IT’S BEEN A LONG, HOT SUMMER IN MORE ways than the obvious one.

At both ends of the country, consumers and regulators have been turning up the heat on their electric utilities’ smart grid projects.

In southern California, Pacific Gas & Electric Corporation has most recently seen pushback from customers in the town of Fairfax and in Marin County (the greater area in which Fairfax is contained). In early August, the Fairfax town council unanimously passed a controversial “urgency ordinance” that placed a temporary moratorium on the deployment of smart meters (specifically PG&E’s SmartMeters) and related equipment within the town, citing concerns about accuracy, data security, health questions and more.

Around the same time, California Assemblyman Jared Huffman (D-San Rafael) announced he’d issued a request to the California Council on Science and Technology “to determine whether Federal Communications Commission standards for SmartMeters are sufficiently protective of public health—taking into account current exposure levels to radio frequency and electromagnetic fields—and further to assess whether additional technology-specific standards are needed for SmartMeters and other devices that are commonly found in and around homes, to ensure adequate protection from adverse health effects.”

PG + E explains

In the wake of all of this, Peter Darbee, PG&E’s chairman and CEO, appeared at a California Public Utilities Commission (PUC) thought leaders event, where he was asked whythe public reaction to PG&E’s SmartMeters is so much more negative than to smart meters and AMI systems being installed by other utilities across the country. “As I said before,” Darbee answered, “I don’t think we’ve done as good a job of explaining and communicating to the public the benefits of smart meters to begin with.”

As well, he said, there was a confluence of events in Bakersfield—an earlier base of PG&E smart meter contention, and the one which prompted both PG&E and the CPUC to undertake independent studies to verify the accuracy of the SmartMeters—that included 17 days in July 2009 that were over 100 degrees Fahrenheit, versus only six days the previous July. So, those who used air conditioners over those 17 days would, by virtue of increased electricity use, have bumped themselves up to a higher-tiered, more expensive per-unit pricing, given California’s tiered rate structure.

BGE gets regulatory pushback

In the meantime, Baltimore Gas and Electric (BGE) found itself embroiled in a situation with the Maryland Public Service Commission that had the rest of the industry watching closely, wondering what potential relevance the outcome would have on future regulatory decisions across the country.

In a nutshell, BGE last fall won the U.S. Department of Energy (DOE) nod for a $200 million smart grid investment grant, one of the largest handed out, for its proposed smart grid project. In the meantime, the project was being vetted for approval by the state’s public service commission.

In June, the commission said no—it wasn’t impressed with a “tracker surcharge” for cost recovery, mandatory time-of-use pricing and a business case that placed the most project risk on the consumers’ backs/wallets. It did, however, suggest that BGE resubmit an amended proposal. With the DOE grant at risk, BGE went back to the drawing board and quickly resubmitted a proposal the public service commission was able to approve.

BGE was quick to point out the consumer benefits in its announcement of the win. “BGE is pleased to move forward with our ambitious smart grid program and deliver the significant transformational benefits to each of our 1.2 million customers,” said BGE’s president and CEO, Kenneth W. DeFontes Jr. “Those benefits include at least $2.5 billion worth of savings for BGE customers over the life of the project, as well as major new enhancements in customer service and reliability. In addition, BGE will be able to take advantage of $200 million that the U.S. Department of Energy awarded BGE for its innovative program, reducing the cost of the project for BGE’s customers by 80 percent.”

Looking to the future

Is this summer’s increased consumer and, therefore, regulatory pushback the tip of the iceberg, with alarming, below-the-surface ramifications for the future?

“We do not see this as a troubling trend,” said Rob Wilhite, senior vice president of intelligent networks and communications for KEMA Consulting.

“It is no secret the utility industry is a very conservative industry.

“It is normal to have some initial pushback in major transformational efforts, such as what smart grid and AMI deployments offer. We just need to ensure that we sufficiently develop leading practices for leaders to follow in the next sequence of events.”

PG&E’s Darbee would agree.

“We’ve been a pioneer in smart meters. But the question is, are we going to be punished for that?” he asked. “Pioneers get a lot of arrows, they got a lot of arrows when they were breaking into America, and we’re getting a lot of arrows here.

”The fact of the matter is, those people who come second or third can look at the path that’s been created, and they can see where people did things better, or did things worse, and they can, of course, correct. And they can look smarter and better.

“But it takes a pioneer to break that initial ground.”

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