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.
Coal corporations have been running ads in the Denver, CO TV market trashing natural gas for the past couple of weeks. The reason? The state government wants to replace antiquated, dirty coal plants with newer, cleaner natural gas plants. The coal commercials point out a fact that I won’t deny: coal is up to 3X cheaper than natural gas in some markets; but that I will provide more detail on: because coal corporations successfully externalize their costs to every other industry. Instead of charging customers for the real-world costs associated with the dirtiest of all fuels, coal corporations let the health and environmental industries pay for the bad effects of their product.
The good news is enough citizens have recognized coal’s costs to them and have done a better job of organizing and fighting back against the powerful coal lobby in forming public policy. Take a look around – stories of coal plants that utilities have wanted to build but have instead been scrapped for other power plants are beginning to populate the news. Additionally, as older coal plants near the end of their serviceable lives, utilities will be faced with the prospect of either retrofitting them, building new ones, or replacing them with cleaner alternatives. In Colorado, the fate of old plants that generate 900MW of electricity is being decided.
If those plants end up going offline and are succeeded by natural gas plants by 2017, almost 1/3 of Colorado’s coal generation will have been replaced. 5 million tons per year of carbon pollution will be avoided, making a not-so insignificant stride toward a cleaner energy future.
Even better is, as I alluded to above, Colorado isn’t alone in this effort. The piece I link to above also points out that Nevada has decided that instead of building a new 750MW coal plant, officials have decided to build a 750MW natural gas plant and combine it with a 50- to 100-MW solar PV plant. One-half of the CO2 pollution that coal plant would have generated will be avoided by building the natural gas plant. A much higher percentage of the CO2 pollution will be avoided by incorporating the utility-scale solar PV plant. Eventually, even the natural gas plants under consideration today will need to be replaced with solar (PV or more likely thermal) and wind plants. Emitting one-half the pollution in the near-future is a good idea. But we need to emit even less if we are to avoid the worst-case climate crisis that we’re hurtling towards today.
The wind farm will deliver 252.2MW of renewable energy to Colorado’s grid, enough to power ~68,000 homes. Vestas Wind Systems, lured to Colorado by Gov. Ritter, built the 139 turbines making up the farm.
This is another small step moving in a critical direction. It doesn’t completely offset yesterday’s news, but I’m glad to see it nonetheless.
Today was another day in which a number of news articles caught my eye. They warrant additional context, especially the connections between some of them.
Interior Secretary Ken Salazar has been working behind the scenes to talk with what the corporate media likes to term “centrist”/”moderate” Democratic Senators regarding health care. He will continue to try to convince CorporateDems to vote to allow debate on the Senate health bill. What’s the center position between corporatist lackeys and principled public servants anyway? Another very popular Washington buzzterm came into play: Salazar is involved because he was involved in several bipartisan agreements while a Senator. He was at the forefront of what I term the Gaggle of Gangs in the Senate – joining with other “centrists” to keep the filibuster around but ensure Democrats wouldn’t use it while in the minority. Which is part of the reason why Salazar is being sent back to work on his former colleagues: the Cons are threatening to filibuster the health bill (though Democrats won’t actually force them to carry one out) and -gasp- Democrats might join them. That’s the answer to “How did that bipartisanship end up working out”. Whatever happened to the Cons’ “Upper-down-vote!” they couldn’t get enough of? One person of concern is Sen. Lieberman, the man who campaigned for Sen. John McCain in last year’s presidential election and is doing everything he can to keep himself in the news this year. Salazar was “mentored” by Lieberman when he joined the Senate, so I’m sure Lieberman can be convinced to play nice – aren’t you? Oh, and after watering down the bill with nonsense to appease “centrist” Republicans, where are their votes to move to debate? MIA? Why did we negotiate with them exactly? They’re not going to vote for the final bill.
I originally covered the request here and davewolfusa followed up with an outstanding call to action post. No matter how the fees were calculated, it was simply the idea that people with new solar power systems were going to be charged extra every month to be connected to the power grid that spurred so many to action.
Gov. Ritter is smartly trying to consider the real problem Xcel is facing as the New Energy Economy moves forward:
“We appreciate Xcel’s concerns about the cost of distributing power and maintaining the electric grid, and we will work with Xcel to study these issues moving forward,” Ritter said in a statement. [...] Ritter said the GEO [Governor's Energy Office]will analyze the costs and benefits of “distributed generation,” such as rooftop solar systems installed across a wide area, so that state regulators can use that information when deciding the costs and benefits of the rapidly growing sector.
Xcel’s spokesman also sounded pretty reasonable:
“We need to sit down to discuss the most appropriate way to deal with this issue, which we see as growing in the future, and address it for all parties involved,” [Xcel spokesman Tom] Henley said.
Xcel’s announcement said it was committed to talking with solar power advocates to address the issue of costs and payments in the future.
See, that wasn’t that hard. Let the public know what issue you’re facing and I’m sure most folks will come to the table with an open mind. But announcing what looks like a punitive fee to clean energy advocates without a venue to discuss it with those advocates was a bad idea. So perhaps the lesson associated with this episode is Xcel needs to work on its communication skills with its customer base. Let’s hope that’s improved in the future.
[Update]: johne at SquareState has an interesting take on this news.
Two items caught my eye today. The first, Xcel plans backup fee for solar, demonstrates how out-of-touch and greedy Xcel continues to be. Xcel wants to charge their customers who have solar panels to provide electricity when they demand more than what their solar systems provide. Those customers are already hooked up to the grid, of course, which immediately raises the question, “Why?!”. Here are the details:
Xcel is proposing a 2.6 cents per kilowatt hour fee to provide electricity from the grid. That fee would be tacked onto the electricity rate that Xcel charges every customer. So those with solar panels would be charged more per kilowatt hour than those without solar panels. That’s also on top of the $7 or $8 “service fee” that Xcel charges to cover meter reading and billing. The only spot of good news from this proposal is that existing solar customers would be grandfathered in – not subject to Xcel’s new fees.
If a person’s house is already hooked up to the grid and has been drawing power from dirty energy for any length of time, what justification could Xcel have to charge that person more per kilowatt hour if they install clean energy and reduce overall demand from our antiquated and overused energy transmission system? Moreover, solar panels can easily generate more power than an owner uses while collecting the energy. Customers are credited for that excess energy because it is used by the rest of Xcel’s grid. Thus, Xcel’s transmission and generation costs are actually lowered by these customers. So future customers will be penalized for that service? Do Xcel customer’s have the ability to go to the PUC and demand that the energy they sell to Xcel should match the highest rate they have to pay Xcel? If they don’t, then energy producers don’t have equitable access to the energy market, do they.
I can envision this doing one of two things. The first is it puts a crimp on the future growth of solar panels in Colorado. Why would people, especially in a severe recession, pay thousands of dollars to put in solar panels and then be charged more per kilowatt hour for the same electricity that their neighbor would be charged? It’s easy: solar panels are less desirable in such a market, ensuring that we remain stuck on dirty energy longer, thereby raising the cost of future climate change mitigation. The second is it drives people to go off the grid. If people can generate and store the energy they produce, what use would they have for an energy corporation whose primary purpose is to generate a profit? And before this second scenario is dismissed out of hand, realize that energy storage technologies will continue to advance. Add in upgrading a home’s energy efficiencies, ability to generate its own power and store excess energy, and the Xcel way of business doesn’t seem so stable or profitable.
The second item was an announcement from Gov. Ritter’s office:
Gov. Bill Ritter said today [July 23] he will oppose the federal government if it moves ahead with a proposal to ship thousands of tons of mercury to a waste storage site south of Grand Junction.
Well, that certainly is good news. Here’s the reasoning:
The risks to ground and surface water are too great. The risks to our air quality are too great. The risks of transporting elemental mercury over long distances and on routes that run adjacent to or cross major water sources, such as the Colorado River, are too great.
That sounds really great too. Um, Gov. Ritter, I have a question: if you’re willing to refuse mercury storage, why hasn’t the state done more to stop toxic chemicals from being forced underground in order to drill out gas and oil? I realize there are some differences in the two cases (government vs. corporations being one), but shouldn’t the quality of our ground and surface water be fought for, regardless of who could potentially foul it?
Thanks go out to Brahman Colorado, whom I met for the first time yesterday. Fracing was the topic of a very good discussion, and this mercury announcement put it into even further context for me.
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.
So far this year, the oil and coal corporations spent $427 million on lobbying Congress and advertising. Every one of those dollars could have gone to building oil refineries, which would increase the supply of oil and gas. Or they could have gone to carbon sequestration research. Instead, they went to ensuring our addiction to oil and coal would continue for years to come. Solutions to this problem are available.
Xcel Energy will relay potential costs of doing business once legislation is passed that accounts for climate change to shareholders.
