Shepherd Advisors

As part of the sessions, Craig presented an overview of Smart Grid basics to help those who are new to the topic understand some of key terms and concepts such as demand response, distribution automation, smart meters, and cost recovery.  Craig also presented findings from his informal survey of Midwest utilities discussing the strategic benefits and concerns that the utilities considered when beginning their smart grid planning and efforts.

 

Most utilities mentioned operational cost savings and a few mentioned reliability improvements as key benefits provided by smart grid investments.  Many of the utilities also described smart grid as a way to empowering customers and providing ratepayers with more value.  Most of these utilities expected to implement peak pricing or time of use pricing where rates would be increased during peak demand periods but lowered at all other times, allowing customers a chance to save money if they shifted their energy usage away from peak periods.  By shaving peak loads, utilities hope to save the entire rate base money by precluding the need to buy energy on the spot market and reducing or delaying investments in new power plant facilities.

 

While Craig had expected utilities to express concerns about customer opposition to smart grid plans similar to the public hostility facing PG&E's smart meter roll out in California, more utilities in fact struggled with customer indifference as a larger problem.  Some utilities are reporting that simply providing customers with information on their energy usage is not enough to motivate the change utilities were hoping for, even when coupled with time of use pricing.

 

In addition to the challenge of getting customers engaged, most of the utilities Craig spoke with are concerned about "stranded technology investments", that is, investing in hardware and software that may be outdated as technology.  This in fact is a problem facing some utilities that invested in Automated Meter Reading technologies 5 or 10 years ago.  Having just invested in meter upgrades, they are not in a position today to begin smart meter deployments.  Given how quickly the technology is improving and the expectations of utilities, customers, and regulators are evolving, these concerns are not unfounded.  

 

Craig advices utilities to step back before making expensive smart grid plans to undertake a planning process focused on strategic goals.  "There are many ways to achieve the same goals and utilities should decide what they want to achieve and systematically review options before designing pilots, issuing RFPs, or choosing technology partners."