1009 Executive Digest.Commentary

For more than two years, I’ve been following Xcel Energy’s SmartGridCity, which Xcel and its technology (vendor) partners promised would bring the industry’s vision of smart grid to life. Unfortunately, the initiative’s future doesn’t look good. David Eves, chief executive of Xcel Energy’s Public Service Co. of Colorado, said in an Aug. 24 Denver Post article that the Boulder-based smart grid experiment will not be repeated or expanded.

That Eves calls SmartGridCity an experiment contradicts Xcel’s original definition and vision. When SmartGridCity was introduced, Randy Huston, who at that time was SmartGridCity’s program delivery executive, made it clear that the initiative was not a pilot project or experiment, but a full-blown smart grid project. He said it would leverage the best talent, building skills and experience, test technologies and processes, and prove the benefits of a smart grid. Everyone was excited and had high expectations.

SmartGridCity has not panned out the way its creators expected. Since the initiative was announced two years ago, Xcel’s costs have grown from the original estimated $15.3 million to nearly $45 million. Its technology partners were supposed to pay the rest of the costs, which were estimated at $100 million. I haven’t seen an estimate on how much they have spent.

 

Xcel understands cost overrun is a problem.

  

“The question is: How can we spend 25 percent as much and get 75 percent of the benefit?” the newspaper quoted Eves.

 

Xcel is working with the Colorado Public Utility Commission (PUC) on a proposed rate increase to recover its costs, not just from Bolder residents, but statewide. The article said the city of Boulder initially supported Xcel’s bid to recover costs, capping it at $44.8 million. Recently, however, the city withdrew from the PUC proceeding. The Governor’s Energy Office supports the rate increase, and the Office of Consumer Counsel said Xcel should get $27.9 million—the amount the company said in 2009 would cover the cost. The Denver Post article said the ArapaHOPE Community Team, a nonprofit public-interest group, said SmartGridCity is a research and development project, and ratepayers should pay none of its cost. The PUC has not ruled yet.

 

Although SmartGridCity didn’t work as planned, it’s not a failure.

 

The article said, “Eves pointed out that SmartGridCity was a first-of-its-kind experiment that is already producing benefits in managing blackouts, voltage surges and maintenance.” 

 

I suspect some of the customer participants also are benefiting.

 

Xcel and its technology partners learned much from the project. I received a call from a PR agent a few days ago who said they—the utility and its vendor partners—soon will be making public some of the successes and lessons during the past two years. These lessons learned will benefit the utility industry and specifically companies that launch similar initiatives. Whenever new ideas and technologies are introduced, someone must go first. Sometimes results are better than expected, and sometimes they are worse. In most cases no matter the results, the endeavors are not complete failures. This is the case with SmartGridCity.

 

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1009 Executive Digest.Commentary

For more than two years, I’ve been following Xcel Energy’s SmartGridCity, which Xcel and its technology (vendor) partners promised would bring the industry’s vision of smart grid to life. Unfortunately, the initiative’s future doesn’t look good. David Eves, chief executive of Xcel Energy’s Public Service Co. of Colorado, said in an Aug. 24 Denver Post article that the Boulder-based smart grid experiment will not be repeated or expanded.

That Eves calls SmartGridCity an experiment contradicts Xcel’s original definition and vision. When SmartGridCity was introduced, Randy Huston, who at that time was SmartGridCity’s program delivery executive, made it clear that the initiative was not a pilot project or experiment, but a full-blown smart grid project. He said it would leverage the best talent, building skills and experience, test technologies and processes, and prove the benefits of a smart grid. Everyone was excited and had high expectations.

SmartGridCity has not panned out the way its creators expected. Since the initiative was announced two years ago, Xcel’s costs have grown from the original estimated $15.3 million to nearly $45 million. Its technology partners were supposed to pay the rest of the costs, which were estimated at $100 million. I haven’t seen an estimate on how much they have spent.

 

Xcel understands cost overrun is a problem.

  

“The question is: How can we spend 25 percent as much and get 75 percent of the benefit?” the newspaper quoted Eves.

 

Xcel is working with the Colorado Public Utility Commission (PUC) on a proposed rate increase to recover its costs, not just from Bolder residents, but statewide. The article said the city of Boulder initially supported Xcel’s bid to recover costs, capping it at $44.8 million. Recently, however, the city withdrew from the PUC proceeding. The Governor’s Energy Office supports the rate increase, and the Office of Consumer Counsel said Xcel should get $27.9 million—the amount the company said in 2009 would cover the cost. The Denver Post article said the ArapaHOPE Community Team, a nonprofit public-interest group, said SmartGridCity is a research and development project, and ratepayers should pay none of its cost. The PUC has not ruled yet.

 

Although SmartGridCity didn’t work as planned, it’s not a failure.

 

The article said, “Eves pointed out that SmartGridCity was a first-of-its-kind experiment that is already producing benefits in managing blackouts, voltage surges and maintenance.” 

 

I suspect some of the customer participants also are benefiting.

 

Xcel and its technology partners learned much from the project. I received a call from a PR agent a few days ago who said they—the utility and its vendor partners—soon will be making public some of the successes and lessons during the past two years. These lessons learned will benefit the utility industry and specifically companies that launch similar initiatives. Whenever new ideas and technologies are introduced, someone must go first. Sometimes results are better than expected, and sometimes they are worse. In most cases no matter the results, the endeavors are not complete failures. This is the case with SmartGridCity.

 

Authors