The blogosphere and media channels have recently been full of news about the Maryland PSC’s decision to reject a Smart Grid program proposed by Baltimore Gas & Electric, even though this plan had already received ARRA stimulus funding and the utility claimed that failure to approve the plan by July 30 would cause those stimulus funds to be lost. That case has been resubmitted to the PSC which is expected to rule on the revised proposal by August 5. We can expect more controversy whichever way the PSC decides.
In Hawaii, the PUC rejected a request to extend an existing AMI pilot and there has been significant backlash against smart meter deployments in Texas and California. Many commentators see these issues as setting precedent for other state utility commissions that will review Smart Grid proposals in the coming months and a person could be forgiven for reaching the conclusion that this whole Smart Grid thing is just another passing fad that is destined to end up in the trash can of technology history. Regardless of whether your concern is about global warming, air pollution from coal fired and other fossil fuel generating plants or a strategic concern about dependency on foreign oil, such an outcome would be very short-sighted and would not help the US to implement the necessary steps to modernize its aging electric grid and begin to address the problems of runaway electricity demand.
A careful reading of the BG&E decision shows that the PSC was not ruling against Smart Grid in general or the specific technical merits of the proposed plan from BG&E but against a number of very specific flaws in the BG&E proposal. One key problem that the commission highlighted was BG&E’s request for recovery of the capital and operational costs associated with the project through a tracker surcharge on consumers’ bills rather than through the more common method of recovery via per-KWh rates. This would allow the utility to recover all of the costs up front and the PSC viewed this as unfairly transferring the risk from the shareholders to the consumers. A second problem that they cited was the proposal for a mandatory time of use rate plan which was opposed by many advocates who feared that this would cause consumers’ energy bills to rise. The third major objection raised by the commission was that they believed that significant additional money would be required to complete the consumer outreach efforts required to make the program successful.
Amidst all this negative publicity, the Green Technology Organization of Greater Chicago last week hosted its monthly meeting where Mark Curran, Director of the Department of Public Utilities – Electric in Naperville, IL and Allan Poole, Former Director of Public Utilities in Naperville and now a consultant to the city, presented a case study on the Smart Grid Investment Project that the City of Naperville is currently undertaking. In addition to providing a very engaging and informative presentation, Mark and Allan also presented a stark contrast to the experiences discussed above.
Naperville is a city of 145,000 citizens, located in DuPage and Will Counties, 30 miles SW of Chicago IL. Electricity in the city is supplied by the public utility which is owned and operated by the city. The utility has over 57,000 meters (approximately 50,000 residential and 7,000 commercial & industrial customers) and experiences peak demand of 388 MW and annual energy usage of 1,550,000 MWh. The 46 sq mile service area has 19 miles of 138 KV and 33 miles of 34.5 KV transmission lines, 72 miles of 12.47 KV overhead and 800 miles of 12.47 KV underground distribution lines. Connection to Commonwealth Edison transmission lines is made at 7 locations around the city.
As a municipally owned entity, the utility is not a profit center. It exists to serve its customers and does not feed into or receive funding from the general revenue pool in the city. The city decided in the 1960’s, prior to the major growth of Naperville, that all future distribution should be placed underground which has provided protection from storm induced outages. The 72 miles of overhead distribution are concentrated in the downtown area where the cost and the technical challenges due to existing underground infrastructure preclude moving this existing distribution underground. The conduit used for the underground distribution is also used for other services within the city.
In 1992, Naperville’s SAIDI measurement showed that the average customer experienced 120 minutes of outage time per year. The city had a choice to make: they could dissolve the municipal utility and contract with Commonwealth Edison to supply power or they could invest in the utility infrastructure and take charge of their own future. They chose to invest and started to build a smarter grid before the term Smart Grid was in vogue. Some of the targets of this investment include
- SCADA implementation for real time monitoring and control is already 100% complete across the utility infrastructure.
- Distribution automation using S&C switches to isolate failed cables and reconnect power automatically is 80% complete across the utility.
- Substation automation is 70% complete.
- Two Automated Metering Infrastructure pilots have been completed.
- A secure, robust communication network is 70% complete.
As a result of these and other initiatives, the Naperville utility has reduced average minutes of outage per customer to less than 18 minutes today with the expectation that this metric will continue to drop as distribution automation and other projects reach completion. The rapid growth that the city experienced in the 80’s and 90’s has helped to fund these projects and as a result, the bulk of the utility’s assets are relatively new. The utility’s demonstrated emphasis on reliability has helped to draw a number of major commercial and industrial customers to Naperville.
Naperville currently buys power on the wholesale bulk market through a four year contract which is set to expire in 2011. At that time, they will become members of the Illinois Municipal Electric Agency which will make them co-owners of generation assets including an advanced low pollution coal plant in southern Illinois. This will help to stabilize prices for their customers.
Naperville has been deploying technology in pursuit of operational cost and reliability benefits for many years. As a result, they were more than ready to propose robust, well conceived plans to attract stimulus funds to complete their Smart Grid deployment. The Naperville Smart Grid Investment Project was truly “shovel ready” when the stimulus funds became available.
The city’s Smart Grid Investment Grant business plan is driven largely by continued reliability improvements but will also introduce peak/off-peak differentiated rates and offer customers the tools to control their energy consumption and costs. The proposed differentiated rates are based on time of use and not real time pricing and the utility expects a 3:1 ratio between peak and off-peak rates. As members of IMEA from next year, Naperville will benefit from relatively stable bulk energy usage and demand rates which are set annually. IMEA buys around 15% of their total supply on the wholesale market which introduces limited variability on a month to month basis. The purpose of introducing time of use rates is to allow consumers to shave peak demand in order to control the demand based pricing that the utility must pay to IMEA but, unlike BG&E’s proposal, these rates will not be mandatory for Naperville residents.
The total cost of the Smart Grid Investment Project is around $22 million of which the stimulus is providing 50% and the city is providing the other 50%. However, the utility already had around $9 million reserved for the project so the incremental cost to ratepayers to accelerate the completion of the project is minimal.
Projected benefits of the project include:
- 5% reduction in total energy usage totaling 819,000 MWh over the period from 2012-2023.
- 6.5% reduction in peak demand from 400 MWh (projected) to 374 MWh by 2023.
- $22.3 million in customer electricity cost savings. This is in addition to $450 million in savings compared to the projected cost of using Commonwealth Edison to supply Naperville’s electricity over the past 15 years.
- 180,000 tons of carbon emission reductions.
- Increased business opportunities and 139 new jobs to implement the project.
These and other goals are captured in a metrics benefits plan which is required under the ARRA stimulus funding grant.
One factor that really differentiates the Naperville utility from those that were discussed at the beginning of this article is in their consumer outreach efforts. As a municipal utility, all actions of the utility are subject to review and approval by the city council and all decisions are reviewed in public by the council. A Communication Education plan has been created and, in what may be a unique move, the utility and the city council have proposed a Smart Grid Customer Bill of Rights which is currently in draft form for review by the council. This document is a response to the concerns that have been raised in many communities concerning smart meters and demand response programs and enshrines the customers’:
- Right to be informed: about rate structures, outages and demand information, financial and operational data on the Smart Grid project, and future developments, as well as being able to view their own consumption data from a convenient user interface.
- Right to Options: regarding their rate structure, how they wish to receive information from the utility and the purchase of appliances and devices that allow them to have better control over their electricity consumption.
- Right to Privacy: restricting the utility’s ability to release energy usage data and personal information, providing options regarding the collection, use and disclosure of data and, perhaps most importantly, clearly stating that the customer will retain control of ALL in-home devices and appliances.
- Right to Data Security: guaranteeing secure confidential and accurate consumption data and requiring the utility to have a cyber security plan, a summary of which can be accessed by customers.
It is clear that Naperville’s public utility has put in place many of the safeguards and actions that lead to a successful Smart Grid deployment.
- They have consistently embraced technology as a way to improve reliability and operational efficiency and Smart Grid is really just an extension of a multi-year program that is part of the long term strategy for the utility.
- Clear objectives have been set for the program and these are being tracked in a metrics plan.
- A communication education plan is in place
- The utility has embraced the need to engage with their customers and have proposed an innovative customer bill of rights that will help to achieve the stakeholder buy-in that is required for any project to succeed.
Hopefully other utilities will take their cue from what Naperville is doing and not from the failures at BG&E and elsewhere.
Mark and Allan’s presentation also included a lot of details on the Smart Grid project that Naperville are currently embarking on which are addressed in a later blog post.