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.
Expect more of this kind of news: General Electric has seen the writing on the wall and has decided to buy 25,000 electric vehicles for its fleet by 2015. They will make an initial purchase of 12,000 GM cars, beginning with the Chevy Volt.
This is good news on a number of fronts. Most importantly, tens of thousands of electric vehicles on the road means that much less oil needs to be drilled, transported, sold and burned in the United States. The next phase in a 21st century grid will require less coal and natural gas burning, but less demand for oil is good for the environment and our national security. It demonstrates that electric vehicles are viable transportation choices for fleet cars, which means cars like the Volt will be on the road and visible to the public in greater numbers sooner. It will allow for smarter grid technologies to be implemented in more places. It will help push the cost of electric vehicles lower moving forward. Hundreds of thousands of electric vehicle sales will have to be made to start doing this. The more, the merrier. This will have a direct and nearly immediate benefit to GE – they are developing charging stations to sell. There’s nothing like real-world use to make charging stations’ performance more efficient and robust.
Occasionally, there are too many news bits and stories that I want to take more time to comment on but can’t. Here then are a series of things that caught my eye recently, in no particular order.
The English climate scientists that had their emails illegally hacked have been vindicated in a number of different investigations. At worst, ‘proper openness’ to data was found. Unfortunately, the right-wing misinformation apparatus that sprang into over-drive about the emails’ contents might have accomplished its goal: delaying climate action in the U.S. and England. The short-sighted fools might have put the finishing touches on condemning the next 50 generations to a hellish Earth. Thanks a lot. Oh, in the meantime – nobody has investigated the only crime in the story: the original hacking of servers, what a number of us called ‘hackergate’, but was never picked up by the corporate media (go figure).
GE is putting together $200 Million for an “Ecomagination Challenge”, which they describe as a contest to improve smart grid technology. This is a good role for GE to play. Smart grids have so far had only limited deployment into the real world and that’s something that public policy-makers need to get busy on. Those deployments have been delayed and scaled back because of issues found during deployment. That isn’t shocking, it just means more efforts need to be made to solidify this critical component of our future energy use. I would be even more impressed if GE put a larger purse together, of course. How about $2 Billion for a series of contests. It’s not like they wouldn’t recoup the costs many times over.
I’ve included this in the previous post already, but it really can’t get enough coverage. A Stanford study found that extreme heat waves could be very common within 30 years’ time. The effects on people’s health (fatalities) and agriculture would be massive. Maybe when most of our crops fail and people are dying from heat exhaustion by the thousands, maybe then we’ll take this climate change thing seriously. I would still expect people like Sen. Inhofe to spout his latest nonsensical climate denier talking points, of course.
Add the Pentagon to the list of pinko-commie, tree-hugging, one-world-conspiracy theorists that “believe” in global warming. A group of people responsible for national security have let scientists know they want probabilistic climate change risk assessments conducted. National security folks already come close to speaking the language of climate science. Instead of expecting perfect projections, experts in both fields use ranges and levels of certainty to ascertain risk. Get used to news like this, deniers. After the U.S. military has jumped the shark, there’s no telling who’s next.
Working hand-in-hand with a smart grid (see the GE story above), smart meters remain an unknown technology in terms of how people use them and whether energy usage shifts as a result. The American Council for an Energy-Efficient Economy released a report a few weeks ago that showed that smart meters alone don’t work to trim consumers’ consumption. Just as Prius owners have discovered, once up-to-the-minute feedback is shared to users, people don’t typically have an incentive to conserve. If homeowner’s could see real-time energy prices and demand within their home, they would make changes to how and when they did the same activities they’ve always taken for granted.
I found some designs for vertical farms to be used in urban settings recently. They look cool and they would serve to reduce our food’s carbon footprint dramatically. Google ‘vertical farming’ and enjoy looking through the results sometime.
While Congress remains bogged down on health care, to say nothing of energy and climate, legislation, the executive branch has been very busy this year starting initiatives and issuing new rules and threatening regulations. This is the latest in that series of actions.
Two projects in Colorado are receiving investment money. More on them below…
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!
House Energy and Commerce Chair Henry Waxman and Energy and Environment Subcommittee Chair Ed Markey released their draft energy and climate bill last Tuesday. It’s very comprehensive. It’s also far from perfect. It’s also, for now, just a draft, sure to change and be amended. For those of you who just want a quick peek at what this bill is about, here is the bill’s 5-page summary (pdf) and here is a portion of the introduction:
The legislation has four titles: (1) a “clean energy” title that promotes renewable sources of energy and carbon capture and sequestration technologies, low-carbon transportation fuels, clean electric vehicles, and the smart grid and electricity transmission; (2) an “energy efficiency” title that increases energy efficiency across all sectors of the economy, including buildings, appliances, transportation, and industry; (3) a “global warming” title that places limits on the emissions of heat-trapping pollutants; and (4) a “transitioning” title that protects U.S. consumers and industry and promotes green jobs during the transition to a clean energy economy.
Overall, the bill is pretty decent. It’s not as strong as I think it should be. Knowing that it will be amended and changed in subcommittees, committees and during Senate-House negotiations, I’m afraid I see too much room for major weakening to be done. There is no time left for weakening. The U.S. needs to take an aggressive stance on greenhouse forcing. We’ve caused plenty of change to the climate system already with even more to come that’s “in the pipeline”. Whatever this legislation ends up doing, it will take time to implement and then more time to take effect. Then there will be interactions with the international community. As the world’s largest greenhouse forcer, it is up to us to take responsibility for our actions and start leading the world on the most critical 21st century issue we’ll face.
Below, I go through most of the 5-page summary items. The items stack up to a pretty big list. Having this draft summary is important as we’ll see what changes are implemented in the next couple of months and what the final legislation ends up containing. Oh, and if you’re feeling really adventurous, here is the entire draft bill (Big pdf!).
