Post # 41 - British Study Suggests That Smart Meters Are No Silver Bullet

Following up on my prior post on the recent smart meter study by the Delft University of Technology in the Netherlands, a new British study likewise suggests that smart meters may not necessarily deliver hoped-for energy consumption reduction.

The study, "Smart Metering: What Potential for Household Engagement," was prepared by Dr. Sarah Darby of the University of Oxford’s Environmental Change Institute. Dr. Darby examined motives and outcomes to date of smart metering programs in California, Italy, Sweden and the Netherlands, among others. She finds that there in fact is little hard evidence about smart meters can actually achieve.Her research shows that smart meters are being rolled out for different reasons in difference regions. In Italy and Sweden, for example, the focus has been on reducing fraud and providing accurate billing. In the Netherlands, Ireland and the UK, and to a lesser extent California, the intention is for smart metering to help users improve their energy efficiency and reduce demand. But in some of these regions, notably the Netherlands and California, efforts have been plagued by customer resistance to the gathering, monitoring and storing of personal data.

Dr. Darby believes that if the roll-out is not handled right, demand reduction will not necessarily flow from an improvement in information. In her judgment, what appears to count more than the smart meter itself is the message energy companies provide about energy use over time and trustworthy, relevant comparisons.

Post # 40: Dutch Report Suggests Smart Meters Are No Silver Bullet

A recently concluded Dutch study suggests that smart meters and similar home energy monitoring devices may not be the silver bullet that guarantees substantial reductions in home energy use. In particular, the report – entitled “Home Energy Monitors: Impact Over the Medium-Term” and prepared by a research team from the Delft University of Technology – concludes that initial savings may not be sustainable over the long term.

The study team examined the behaviors of households where “Home Energy Management Systems" – which the report defines as “intermediary devices that can visualize, monitor and/or manage domestic gas and/or electricity consumption” – had been installed on a trial basis. The goal was to see whether the participants sustained changes in electricity consumption over 15 months. In particular, the team wanted to find out if early reductions in energy consumption were continued over a longer period.

Participation in the study – and the required installation of the “HEMS” devices – was voluntary. The team monitored a total of 304 participants over four months, and then gave them the option of retaining the monitor. Those who kept the monitor were surveyed again 11 months later.

The findings showed that there were initial savings in electricity consumption of an average of 7.8% over the first four months, but these savings were not sustained over the medium to long term. At the same time, the study also found that some people were more receptive to energy saving behavior changes than others and quickly developed new habits, giving them continuing substantial savings.

The authors believe that that more research is needed not just into the design and usability of home monitoring devises, but also on social science issues and contextual factors. The basic conclusion: installing energy monitors alone will not necessarily reduce electricity consumption.

Post # 39 - Mixed Findings for Pacific Gas and Electric

A recently concluded investigation of the performance of smart meters installed by Pacific Gas & Electric finds that, while the meters are accurately measuring energy use, there are flaws in the way PG&E has handled customer complaints and monitored data transmitted by the new digital meters.

The investigation, conducted by Structure Consulting Group LLC on behalf of the California Public Utilities Commission, was mandated by the CPUC in response to a surge in complaints that blamed digital meters for high bills and other problems. The CPUC issued Structure’s report on September 2, 2010.

The report concludes that while PG&E's digital smart meters are accurate, the utility nonetheless has not done enough to educate customers about the switch. Moreover, the report finds that PG&E has not adequately responded to the full suite of data it gets from the meters.

Structure states that it tested 611 of PG&E's advanced meters, which were made by Landis+Gyr, and found that all met industry standards for accuracy (accuracy to plus or minus 2%, meaning usage must be recorded within a band that is 98% to 102% of the amount actually used). Structure also found the older electromechanical meters that are being replaced are less reliable than new digital meters. Of the 147 old meters tested, accuracy was 96%.

Structure also reviewed 1,378 electric Smart Meter complaints and performed in-depth customer interviews, finding issues with PG&E customer service management and adherence to industry best practices. For example, customer questions regarding Smart Meters and individual customer usage patterns were not effectively addressed by PG&E. In some cases, customers experienced multiple cancelled bills followed by re-billing, which exacerbated customer confusion and frustration.

In addition, customers indicated to Structure that there was a lack of communication and notification from PG&E about their smart meter installation. The report also said that the CPUC's own handling of certain consumer complaints created confusion for the customer when the CPUC deemed the complaint closed even though the customer was still not satisfied with or did not understand PG&E's resolution of their complaint.

At the same time it released Structure’s report, the CPUC issued a press release reflecting Structure’s mixed findings. Thus, CPUC President Michael R. Peevey said that while he was “happy to hear that PG&E's Smart Meters are functioning properly,” he was also “disturbed by PG&E's lack of customer service and responsiveness. [The CPUC] will ensure that PG&E improves their customer service, and we will also continue to improve our own complaint handling processes." Similarly, Commissioner Dian Grueneich said "the report is encouraging in terms of the performance of actual meter hardware. However, I am very concerned about PG&E's performance in terms of industry best practices and how in some of the best practices areas, PG&E's performance has actually declined."

So it appears that while PG&E can point to the potential of its state-of-the-art digital meters, the utility still has a lot of work to do,

Post # 38 - Apparent Xcel Victory in Boulder

According to press reports, as part of settlement reached yesterday, staff of the Colorado Public Utilities Commission will not contest $44.5 million in costs associated with Xcel Energy's SmartGridCity project in Boulder. The Governor’s Energy Office also signed off on the settlement.

At issue was whether ratepayers or shareholders should foot the costs of the Boulder-based pilot project, which had tripled in price from initial estimates. Xcel Energy, the state’s largest utility, has attributed the cost overruns (from the initially estimated $15 million to the actually incurred $44.5 million) to unanticipated problems arising from laying fiber optic cable to 23,000 homes and related software expenses.

Overall, Xcel Energy serves approximately 1.1 million customers throughout the state. Despite the overruns and the fact that the improvements in power distribution and metering systems will be limited to 23,000 Boulder homes, Xcel argues that all ratepayers ultimately will benefit and should thus share the costs.

The PUC already had approved the costs as part of broad rate increases that went into effect at the beginning of this year, but had opened a separate case to consider getting back the money. Friday’s settlement apparently ends that challenge as far as PUC staff and the Governor's Energy Office are concerned.

However, the settlement will not apply to any expansions of the SmartGridCity project. Moreover, other parties to the PUC proceeding – Colorado's Office of Consumer Counsel, the community organization ArapaHOPE Community Team and a citizen intervenor, Leslie Glustrom – still will contest the rate increases for SmartGridCity at a hearing scheduled for August 31^st.

So the full implications of the settlement remain unclear, at least at this writing. But at this point, it looks like a potential victory for Xcel.

Post # 37 - GIS and Smart Grid

A “geographic information system,” or GIS, integrates hardware, software, and data for capturing, managing, analyzing, and displaying all forms of geographically referenced information. Many information technology experts believe that successful utility integration of GIS technology is essential to smart grid development.

But according to a new study by Ersi, a software development and services company providing GIS software, there currently is a wide range of GIS capability among utilities, with the largest often being the least smart grid ready. Ersi finds that data accuracy is spotty and often either incomplete or not GPS accurate. Interestingly, according to Ersi, the larger a utility’s size, the less likely it is to be “smart grid ready.”

Although Ersi obviously is not a disinterested bystander, its study contains interesting data about utility integration of GIS technology. In the last quarter of 2009, Ersi conducted what it calls a “smart-grid-readiness survey” of electric utilities around the world (though primarily located in the United States). About 60 percent of the 226 responding companies had fewer than 100,000 customers (what Ersi terms “mid-size”), 30 percent had from 100,000 to 2 million customers (“large”), and the remaining 10 percent had more than 2 million customers. (“very large”). Over 70 percent of the respondents view GIS technology as strategic to the smart grid; the remaining 29 percent believe GIS plays a significant role.

But with respect to accuracy and integration, only one-third of the responding utilities say they update their GIS data within ten working days of completion. Overall, the study finds that utilities report a lag time of up to 90 days to move data from the field into the GIS. Moreover, the study found a strong inverse relation between company size and the time it takes before completed work is reflected in the GIS data base. The larger the company, the longer it takes -- although the difference is considerably greater between the “very large” and “large” utilities than between the “large” and “mid-size” utilities.

Twenty-five percent reported that there is information older than six months that is not reflected in their GIS. Perhaps most significantly, only 15 percent report “high confidence” – defined as an error rate of less than 2 percent – in their GIS data. And, as noted above, Ersi concludes that the larger the utility the less likely it was to be among the most “smart grid ready” companies.

Post # 36 - BGE Across the Finish Line? (UPDATE)

UPDATE, 8/16/2010: Having taken the weekend to think it over, BGE this morning announced it will accept the conditions imposed by the Maryland PSC's 8/13/2010 decision and move forward with its smart meter installation -- without upfront authorization to pass through the costs to ratepayers. In its announcement this morning, BGE noted that the MPSC found that the project itself was in the public interest and that the PSC assured the company that it could expect to recover "prudently incurred [project-related] costs." The company also asserts that, at the end of the day, the project will allow for at least $2.5 billion in savings for its 1.2 million customers.

The combination of the MPSC's conditional approval on Friday and BGE's acceptance today of the conditions also means that BGE has secured the $200 million grant for the project approved by the U.S. Department of Energy. BGE will now move forward and, following periodic reviews, seek incremental cost recovery from the PSC.

So, after some major stumbling blocks this summer, BGE's smart meter roll out begins. And so does continued MPSC review and oversight.
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8/14/2010 POST: Following up on my August 12th post, late yesterday (Friday, August 13th), the Maryland Public Service Commission issued an order conditionally approving Baltimore Gas & Electric's smart meter roll out. Assuming BGE accepts the MPSC's conditions, this will allow BGE to retain its $200 million grant for the project for the U.S. Department of Energy. As I noted in the prior post, DOE reportedly had set a August 16th deadline for BGE to receive necessary PSC approval.

But BGE's acceptance of the conditions is not necessarily a done deal, because the new order still appears to fall short of BGE's hopes.

Last June, of course, the MPSC rejected a BGE plan that would have recovered all costs in excess of the $200 million (an estimated additional $635 million) though a consumer surcharge. BGE also sought to impose mandatory "time-of-use" or "dynamic" pricing schedule during the summer months, based on time-of-day and time-of-week usage. As related in Post # 25, the MPSC rejected the proposal, holding that BGE had not established sufficient rate payer benefits to justify mandatory cost recovery.

In July, BGE returned to the MPSC with a modified proposal, under which the company would recover only 25 percent of the project costs through the surcharge. For the remaining 75 percent, BGE would seek cost recovery through traditional rate recovery mechanisms over the life of the project. In other words, BGE would have to ask for cost recovery on a periodic basis, with the PSC saying "yea" or "nae" after reviewing each application. In addition, under the proposal, BGE would no longer make time-of-use rates mandatory -- customers instead would choose whether to go the dynamic pricing route. See Post # 29.

However, in the August 13th order, the MPSC ruled that BGE may recover costs only though regular rate increases and apparently only after the company has completed its smart meter network. In other words, no surcharges. If BGE moves forward, it apparently will have to do so without any guarantee of cost recovery. At the same time, the MPSC seemed favorably impressed with the technical aspects of BGE's proposal. The order concludes by saying that "[i]f the project goes as BGE predicts, or anything like it, BGE should have no trouble proving in its future distribution rate cases that it has delivered the benefits to consumers that make the project cost effective. . . .'

We should know shortly whether BGE is prepared to move forward on that basis.

Post # 35 - BGE’s Smart Meters: Down to the Wire?

BGE’s smart meter problems with the Maryland PSC (see post nos. 25 and 29) are coming to a head. The PSC last week held hearings on BGE’s revised plan, and August 16, 2010 (this Monday) effectively is the date for the PSC’s decision. This is because BGE’s plans are predicated not only on MPSC approval of its cost-recovery mechanisms, but also on a $200 million stimulus grant from the U.S. Department of Energy.

As noted in a recent Special Report by DOE’s inspector general, the 2009 federal stimulus legislation provided DOE with over $36 billion for various environmental programs and initiatives. Approximately $4.5 billion of that was targeted to smart grid projects like BGE’s smart meter program, see here.

The inspector general’s report notes that approximately $32.7 billion of DOE’s stimulus grant funds have been “obligated,” i.e., awarded to projects that are going forward. But the report also notes that, under the terms of the stimulus legislation, the remaining $3.4 billion, including BGE’s $200 million grant, must be obligated by September 30, 2010 – or the grants expire.

While not addressing BGE by name, the report expressly singles out BGE’s situation (emphasis added):

Regulatory approval is needed for a number of previously awarded Recovery Act projects to move forward. As the Department's programs have no control over the outcome of regulatory reviews, it is possible that some obligations could fall through in the coming months, not allowing the Department sufficient time to re-obligate funds. For example, a local public service commission recently denied approval of an application submitted by a Recovery Act recipient to install equipment provided through the Smart Grid Investment Grant Program. OE [DOE’s Office of Electricity Delivery and Energy Reliability] officials stated that while the recipient’s efforts to obtain regulatory approval are ongoing, OE may need to quickly re-obligate $200 million in Recovery Act funds if approval is not received.

Press reports indicate that DOE has agreed to wait until August 16 – this Monday – to decide whether the agency will revoke BGE’s funding and send the money elsewhere. There is no indication where DOE will send the money if the PSC turns down BGE again. Either way, we (and BGE) will have to wait and see. But not for very long, apparently.