Festering Issue — The Cost of Smart Grid and
Who Should Pay
Editor’s Note: The current economic and regulatory environment has made building the case for smart grid investments not the cinch argument many advocates thought it would be just one year ago. To be sure, Xcel Energy and other utilities say efficiencies do exist with the new technology, although they are not sure in what amounts, and are moving forward with smart grid upgrades such as that ocurring with Xcel’s SmartGridCity. The feds have also forged ahead with significant funding via stimulus grants.
That being said, the smart grid vision will remain just that unless a clearly defined business case and predictable levels of operational and financial risk associated with smart grid investments can be developed. Equally important, predicting how consumers will change behaviors as a result of the new smart grid technology is still an open question. Already, many consumer advocates are chafing at the growing costs associated with smart grid projects, as the Denver Post’s Steve Jaffe wrote about in his February 14th article. Here is an excerpt:
By Mark Jaffee
The interactive, computer-managed electric distribution system known as smart grid isn’t just smart — it’s expensive.
The cost of upgrading the country’s system is set at $165 billion over the next two decades by the industry-funded Electric Power Research Institute. In Colorado, Xcel Energy’s pilot SmartGridCity in Boulder comes with a $100 million price tag.
As the costs mount, there are questions from consumer advocates in Colorado and across the country about how smart grid should be financed and who should pay the bill.
“This is all uncharted territory,” said Bill Levis, director of the Colorado Office of Consumer Counsel. “The costs have to be properly accounted for.” Consumer advocates in Pennsylvania and California are questioning the usefulness of expensive smart-grid technologies — especially smart meters that track real-time energy use and can control appliances.
“The cornerstone of smart grid is this house where your meter talks to your appliances,” said Mindy Spatt, spokeswoman for TURN, a California utility advocacy group. “My toaster is never going to talk to anyone.”
Homes can be made more energy-efficient and energy use can be managed without expensive meters, Spatt said.
Xcel seeks $42 million
In December, Levis’ office, the city of Boulder and other consumer groups convinced the Public Utilities Commission that Xcel should file for smart-grid expenses separately from other rate increases.
Xcel is looking to recover $42 million in smart-grid investments and operations over the life of the project. “How much will it cost? What are the benefits?” said Jonathan Koehn, Boulder’s sustainability coordinator. “We need a transparent forum to discuss these questions.”
This will be done through the commission’s certificate- of-need process, which looks at the need for and prudent cost of a project, Koehn said. Xcel appealed, arguing that smart grid was just an upgrade of existing transmission and that software and proprietary technologies do not usually need special review.
On Feb. 3, the commission rejected Xcel’s arguments.
the rest of the story …
Filed Under: ARCHIVES • Feature Articles • SmartGRID
Tags: City of Boulder • Colorado Public Utilities Commission • smart metering • SmartGridCity
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