I last wrote on this topic a couple of months ago, following a Denver Post article that started with a Judge’s decision that ratepayers should not be responsible for cost overruns associated with Xcel’s SmartGridCity program. The judge’s decision was not the final step in the matter. As a matter of course, the final step was the Colorado’s Public Utilities’ Commission decision whether to grant Xcel’s request to collect $16.6 million from Colorado ratepayers.
If this is the first time you’ve read about this, here is a short history. In 2008, Xcel proposed SmartGridCity, in which they would install approximately 50,000 smart meters in the city of Boulder by year’s end. It was one of the most ambitious smart grid projects announced at the time. Xcel’s proposal totaled $15 million in costs, which they themselves would completely bear. Seven partner companies were supposed to pay for the remainder of the $100 million project. A little something called the Great Recession got in the way, along with little transparency and project mismanagement on Xcel’s part. Today, 23,000 smart meters are installed – at a cost of $44.5 million, triple the original estimate for less than half the project deployment. The PUC previously approved Xcel’s request for $27.9 million, which is currently collected through customer rates, not from Xcel’s assets.
Thankfully, the PUC decided today to reject Xcel’s request with prejudice, which means Xcel cannot appeal the decision. I support this decision mainly because I do not think Xcel should saddle regional ratepayers with costs for benefits they cannot receive. That is a disgusting business practice and terrible precedent to set for future projects. In a similar vein, Xcel’s success in expanding a coal plant in Pueblo, CO seemed to many to be a grab at capital to pad profit. Ratepayers overwhelmingly rejected the plant’s expansion because it would generate more electricity than demanded by the population as well as its long life: Xcel stuck CO with this expanded plant for the next 50 years.
I have expressed my frustration with the PUC on occasion. I do not think they exert the appropriate level of oversight over Xcel when the energy utility asks for rate increases, especially given Xcel’s lack of correctly forecasting generation capacity or demand. This decision doesn’t atone for past decisions I didn’t agree with, but I am glad of this result.
I reiterate my general support for the smart grid. I think we will eventually witness a significant transformation of the US’s power sector, including its infrastructure. Smart grid technologies could usher in an era of increased efficiency. Energy consumers currently do not have much access to data on their usage. Many (not all) people could change their consumption habits if they had access to that data.
A quick description of the project: Xcel Energy planned to hook up residential, commercial, and industrial properties in Boulder, CO to new technologies so that the utility could more easily see which parts of the grid were performing well or poorly and so customers had real-time access to their energy usage. The latter feature was particularly intriguing to me since I’m a data junkie. I look at my solar PV system’s website constantly to see how much energy its generating. I would do backflips of joy if I had access to energy consumption by my appliances and outlets.
The initial cost of the project was reported to be $15 million, although Xcel said that collectively with its partners, $100 million might be spent to lay the infrastructure and get everything working. Xcel’s publicly stated plan was to install digital meters in 15,000 homes Aug. 1 2008 and approximately 50,000 meters by year’s end. Xcel targeted 1,850 installations of in-home energy devices. They told Boulder’s mayor that they would not seek payment for customers for their grand experiment. Their overall plan? To revolutionize how power was monitored and controlled by stakeholders. That’s about where the good news ends.
Due to the Great Recession as well as overall mismanagement, costs tripled: $44.5 million was the final price tag. Xcel had a good idea a few months after their original announcement that costs would approximately double, but did not inform either the Public Utilities Commission (PUC) or the public. As usually happens when a corporation has an epic fail, the customer was held financially responsible. Xcel filed rate increase requests with the PUC that increased over time as they sought more and more money from all its ratepayers. Customers throughout Xcel’s service region (not just Boulder customers) have already paid $27.9 million!
For what did ratepayers actually pay? Today, only 23,000 meters are hooked up. Customer’s with the meters can view 15-minute energy data, not up-to-the-minute data. Only 101 homes have in-home energy devices (5.5% of the original number). So fewer than half the original number of smart meters and 5% of in-home energy devices were installed. The service delivered does not match the service promised when the project was first proposed. For all this, Xcel wants 3X the money they initially requested.
Which brings us to the judge’s decision. In November 2008, Xcel filed a $15.3 million SmartGridCity (SGC) request with the PUC. In May 2009, they re-filed for $27.3 million with the PUC for SGC. In July 2009, they re-filed for $42 million. Xcel included $44.5 million in a 2010 general rate increase, which the city of Boulder and the Colorado Office of Consumer Counsel challenged. In January 2011, the PUC approved SGC and allowed Xcel to collect $27.9 million for the project (more than the 1st re-filing and almost 2X the original filing). In December 2011, Xcel filed to collect the remaining $16.6 million. Yesterday, the judge ruled that “The lack of information provided here regarding customer-facing benefits or justification of the cost overruns fails to meet the Company’s burden of proof.” The PUC will consider the judge’s ruling at a future meeting, which means that customers still might have to pay for this folly of an experiment.
I could make a dozen analogies why I think this situation is so bad. Suffice to say corporate experiments should not be paid for by customers, especially when the corporation hasn’t acted in good faith. Moreover, I challenge anyone to find the local libertarians who take up space in the media railing against Xcel for this money grab. They’ll complain long and loud about the Transportation District and its decisions regarding expansion of light rail across the Denver metro area. Due to rising commodity prices and mismanagement, an entire line could be delayed until 2042 while every other line is built out by 2019 and some lines receive luxury stops because District personnel live by them. There is a big difference, however, in a public agency issuing transit projections based on revenue projections which turned out to be more optimistic because they didn’t forsee the Great Recession and a corporation hiding ballooning costs from a public regulatory agency. But while RTD is a governmental entity, Xcel is a corporate entity. In these so-called libertarains’ minds, government can do little good while corporations can do little harm. Hence, the only commentary on the topic was 3 paragraphs from Vincent Carroll back in August: “SmartGridCity delivered less consumer benefit than originally advertised. More to the point, however, it cost way more than Xcel estimated. Surely this sort of major miscalculation should cost Xcel more than a little bad publicity.” That’s the same Carroll who has had plenty to say about FasTracks and little of it useful for discussion.
The PUC needs to tell Xcel to eat the costs because Xcel severely mismanaged their project. Ratepayers already are responsible for twice the originally quoted amount. Xcel should revamp their smart grid strategy. The smart grid will be a valuable tool for higher energy awareness in the future. Other utilities are implementing smaller but more reasonable portions of their smart grids. A lesson a supervisor hammered into me years ago is apt: don’t go out and design the Cadillac version of something on your first try. With all the mistakes that will occur with a ground-breaking venture, design something basic but solid first, from which you can add bells and whistles later.
Two news stories caught my eye this weekend dealing with Smart Grid projects. Smart grids are being researched and developed to connect residents and businesses with utility companies. Based on the thought that people tend to reduce usage of resources when presented with that information in real-time, smart grids are envisioned as a way to help bring our wasteful energy use down. I hold the opinion that they are a critical development in solving our climate crisis. Serving as a foundation to introduce applications for people to directly affect their energy usage on a minute-to-minute basis if they choose, incorporating plug-in vehicles to act as energy storage and delivery systems and pulling together demand-site and utility-scale energy generation technologies, smart grids need to be developed and deployed to every city as quickly as possible.
But haste makes waste, as the saying goes. On the way toward deploying smart grid technologies, robust systems that are well-planned and installed as advertised are obviously important. That brings me to the first story: Xcel, critics await PUC’s smart-grid rate ruling. A little bit of background: back in March 2008, Boulder, CO was announced as the first city where smart grid technologies would be deployed. Originally, 15,000 smart grid meters were to be installed by Aug. 2009, with 50,000 meters installed by Dec. 2009, at a cost of “up to $100 million”. I noted back in March 2009 that Xcel was running into some delays and that hard projections were becoming scarce to locate. That trend has continued. There is plenty of information available to participants in the program, but Xcel has understandably not advertised the kind of information they were when the program was announced. As best as I can figure out, there are far fewer than 50,000 participants in Boulder’s smart grid program today.
After all the frustration that progressives such as myself have felt over the health care “debate” in the past few weeks, it’s nice to come across pieces of better news. Such is the case with an announcement from the Energy Department and Colorado’s Senate offices: the city of Fort Collins, CO will receive $5 million in Recovery Act funds for a smart-grid demonstration project, one of eight projects around the country.
This is actually the second smart-grid project to be established for a city in Colorado. The first, in Boulder, is being developed in concert with Xcel Energy, which I covered in March 2008, May 2008 and March 2009. Boulder’s and Xcel’s progress on this initial project has been a little hard to come by this year, as I wrote about back in March. Their website has been redesigned a couple of times, but the same material just seems to be getting shuffled around.
It looks to me like Xcel’s initial target of 50,000 homes to be connected by the end of this year was scaled back to 23,000 homes by the middle of this year. To this point, I haven’t been able to determine if this lower target is going to be achieved or not. I’m sure Xcel and Boulder are experiencing issues and delays that weren’t forseeable when the program was announced. I hope that Ft. Collins and the Energy Department are in touch with Boulder and Xcel officials about their experiences. Sharing learned lessons would likely help the Ft. Collins program announce more realistic target numbers and dates.
Back to the Ft. Collins announcement:
The City of Fort Collins, in cooperation with a number of partners in the state, will research, develop and demonstrate a coordinated and integrated system of mixed clean energy technologies and distributed energy resources to reduce peak load electricity demand at distribution feeders and expand use of renewable energy sources.
Smart grids and smart cities will be important cogs in our future smart energy culture. I’m sure efforts like the ones in Boulder and Ft. Collins will seem quaint in the not-too-far future. But they’re important stepping stones to get to where we need to be. Congratulations, Ft. Collins; thank you Sec. Chu!
Xcel Energy and its technology partners are making significant progress in the installation of SmartGridCity. The first meters are active and two-way communication between the customer and the utility company is a reality. Xcel Energy has installed sensors and high-speed communications on approximately 82 miles of fiber optic cable. By the end of 2008, Xcel Energy will have more than 13,000 homes enabled with smart meters and by mid-2009, another 10,000 meters will be available for installation at the customer’s request.
Those numbers are down from what I wrote about back in May 2008:
15,000 homes should have brand new digital meters by Aug. 1 of this year. Xcel plans to install approximately 50,000 meters by year’s end.
23,000 by mid-2009 isn’t quite 65,000 meters by the end of 2009. Since then, I can’t tell what’s happened. Xcel tested some PHEVs in October. But no more news has surface as to the progress of the smart meters or the infrastructure installation. That’s kind of disappointing. Hopefully by this summer, more good news will be released.
Boulder, CO was chosen as Xcel Energy’s first “Smart Grid City” two months ago. Today, Xcel will begin work to create that smart grid. That includes rebuilding the energy infrastructure (grid) within the town. Xcel and its partners will reportedly spend upwards of $100 million on the work, which is expected to be completed in two years.
15,000 homes should have brand new digital meters by Aug. 1 of this year. Xcel plans to install approximately 50,000 meters by year’s end. The new system will allow customers to set up a monthly energy budget and receive feedback on their actual usage. This concept has been shown to reduce overall consumption. Right now, most of us aren’t highly aware of where every kilowatt-hour of energy use is going. With these systems, most of us will likely work to minimize our usage. Groups will be established to examine and compete to drive usage to all-new lows, much like Prius and MiniCooper users have done with optimizing their mileage.
Additional smart features include being able to select how much renewable energy is used, program the system to use it at certain times and even how to use it. Appliances will be remotely programmed. If available, renewable energy can be sold back to Xcel. I really like that part. Citizens should not be mindless consumers of externally generated power sources. We should be harvesters and be able to market our own energy.
Once people are accustomed to seeing what item uses the most energy in their house, expect them to but a more efficient model. Refrigerators and clothes driers are large energy hogs. But anything that remains plugged into the wall socket typically acts as a constant energy vampire, especially cell phone and iPod chargers. Control over their time spent on, and thus actively drawing power, will reduce tons of carbon emissions going into the climate system.
The Smart Grid will also feature massive batteries that store energy gathered from wind and solar sources. That energy will be available for release when usage peaks. This feature will be a big improvement over the current paradigm: continually running coal and natural gas plants at full capacity. Another possible source of energy for the system? Plug-in vehicles. The city will consider ways to help increase the number of plug-ins in Boulder. Purchase incentives and city fleet conversions are being considered.
As the first large system to be deployed, there will certainly be things that are done either incorrectly or less efficiently than desired. That’s actually a good thing. As the technologies are implemented elsewhere, they will be constantly improved upon.
Xcel Energy has chosen Boulder as its first “Smart Grid City” using technology to help customers conserve more energy while helping the utility reduce outages.
“Xcel said Wednesday it will work with partners to create a fully networked “smart grid” that can deliver renewable energy such as wind and solar power, along with fuels like coal, to customers with a largely automated system. It would be able to sense when part of the system is overloaded so power can be rerouted to prevent an outage.”
While Xcel hasn’t been on my list of favorite corporations, they deserve kudos for finally getting a program like this in place. The first phase of the project is expected to be in place around August. In 2009, the project will start evaluating data. If all goes well, other states could start seeing smart grid projects as early as 2010.
“Boulder Mayor Shaun McGrath said the Smart Grid City initiative represents an opportunity to help the city meet its goals to cut greenhouse gas emissions.
“We know energy conservation and energy efficiency must be key components of our energy future,” Gov. Bill Ritter said in a written statement. “We also know the least expensive energy is energy that’s never used – the ‘nega-watt.’ New smart-grid technology will allow us to better manage, reduce, monitor and understand our energy use. It also will integrate, for the first time, solar rooftops as a recognized part of our energy infrastructure.””
