By Kathleen Davis, Senior Editor
With more than 900 member cooperatives serving 40 million people in 47 states, the National Rural Electric Cooperative Association (NRECA) cheers on and shores up consumer-owned energy. Thought up during World War II to buy, sell, trade and barter hard-to-find materials–as well as overcome other small-business hardships for power cooperatives during the lean conflict years–the NRECA has been assisting its cooperative members at work along the county roads and country two-lanes of America for more than six decades.
These days, though, the challenges don’t come in the form of material shortages but in the shape of technological complications. Like all power utilities, cooperatives are facing down all the gadgets, gizmos and communications issues that come with the smart grid.
Glenn English, CEO of the NRECA, may be the one man who knows exactly what those 900 members think about all those complications. Utility Automation & Engineering T&D spoke with him this month about meters, machinations, the NRECA’s MultiSpeak initiative and just what’s cooking with cooperatives.
KD: How do rural cooperatives view this industry hubbub over the smart grid?
GE: In articulating the cooperative view of the smart grid, the numbers speak for themselves. Approximately half of cooperatives have installed at least some advanced metering infrastructure (AMI) on their systems; the great majority of cooperatives have also begun to integrate their AMI and other distribution automation technology with other systems. For example, approximately 79 percent of cooperatives with AMI and automatic meter reading (AMR) have at least begun to integrate their AMI/AMR systems with their customer information system (CIS), 26 percent with their geographic information system (GIS) and 23 percent with their outage management system (OMS).
As the Federal Energy Regulatory Commission (FERC) recognized in a recent report, cooperatives are far out in front of other industry sectors in the implementation of AMI. Cooperatives support investments in advanced grid technologies where, and to the extent, they help them provide their consumer-owners with safe, reliable power at the lowest reasonable cost. For many cooperatives, AMI, distribution automation and software integration that are included in the definition of smart grid make good business sense.
On the other hand, cooperatives have been skeptical of some of the more optimistic claims about purported benefits of a smart grid. A smart grid should not be viewed as an end in itself, nor should it be viewed as a tool for promoting markets. If the technology doesn’t benefit consumers, the consumers should not be required to pay for it.
Cooperatives also don’t support the idea of benchmarking all utilities against some idealized vision of the perfect smart grid. While it may make sense for some parts of the grid to have a genius-level IQ, it may also make greater economic sense for other areas of the grid to remain at a much lower IQ level. Again, the level of investment must be commensurate with consumer benefit, and the ideal level will differ according to local conditions on each system, local consumer interest and individual system needs.
KD: The U.S. Department of Agriculture (USDA) recently released a report stating that even cooperatives are facing a power crunch, and that even rural areas will need expanded generation–double, in fact–by 2020. That means more baseload generation, but also more substations, lines and meters to support that generation. How are rural cooperatives planning for that infrastructure investment, from generation to distribution? And, are they prepared, or are they struggling?
GE: Cooperatives have always had to plan for load growth. The task of ensuring adequate generation and transmission is nothing new. We bring to this task a focus on member-consumers and sound business judgment. The unique challenge now lies in the regulatory and legislative arena. Cooperatives are reaching out to policy makers asking for laws and regulations that balance energy, economic and environmental goals while giving cooperatives the flexibility they need to meet their member-owners’ energy needs affordably.
KD: Cooperatives are structured differently than the typical investor-owned utility (IOU); they’re private, not-for-profit, consumer-owned. Has this structure helped or hindered the implementation of advanced metering technology in rural areas?
GE: The numbers make clear that cooperatives are adopting AMI at a much higher rate than IOUs. A survey conducted by FERC showed that advanced metering penetration for the entire industry was at 4.8 percent while the penetration for cooperatives was almost 17 percent. NRECA’s own internal analysis indicates that approximately half of cooperatives have installed AMI.
A couple of factors are driving this high penetration rate. First, the operational benefits of AMI and other distribution automation technologies are often greater in rural areas with low population densities–the kinds of territories many cooperatives serve. The low density increases the costs of meter reading, outage response, system maintenance and distribution losses, and thus increases the potential benefits from technology that helps cooperatives address those issues. Second, most cooperatives are self-regulated for rates. They can make the investments they need to serve their consumers without being concerned that those investments could be disallowed by regulatory agencies. Finally, because cooperatives’ are owned by their own member-consumers and not remote shareholders, they can make investments that help reduce the cost of service to their members without also having to show that the investments will produce a return for shareholders.
KD: A lot of people have the idea that rural cooperatives are behind the times when it comes to metering and smart grid technology implementation. How do you respond to that stereotype?
GE: The facts prove such people wrong. Cooperatives’ focus on their consumers has actually produced much greater investment in AMI and distribution automation. Cooperatives are not against innovation, but they only support those innovations that can demonstrably assist them in meeting their member-owners’ need for safe, reliable, affordable power.
Precisely because they serve rural low-density territories, co-ops have had to automate to remain competitive. The smaller size of cooperatives, along with their self-regulated status, has been a boon to implementing AMI. Without large, corporate bureaucracies or the burden of persuading a regulatory agency, cooperatives face fewer hurdles in introducing innovation and investing in new technologies.
KD: You’ve noted that there are 850 distribution cooperatives in America; the largest serve more than 200,000 member-owners, the smallest serve barely 100. The average-sized distribution cooperative serves 12,467 member-owners. And NRECA represents all of them, from small to large. In representing such a wide range, you get a lot of data from both ends of the spectrum. How do metering applications at large distribution cooperatives differ from metering applications at small distribution cooperatives?
GE: Actually, the size of a particular system does not affect the application of AMI, except insofar as larger applications of AMI will cost more than smaller applications as there is more equipment to buy and more data to manage. The more significant differences affecting AMI technology selection are customer density, terrain, desired features and performance–and, of course, cost.
All distribution utilities–large and small, investor-owned, municipal or co-op–perform the same metering functions. As I noted earlier, the relatively small size of cooperatives has facilitated implementation of new technologies. Co-ops have been ahead of the curve in implementing automated systems because they have been able to make the business case for implementing these systems.
KD: Are any cooperatives planning large AMI projects? Can you give us some details about what’s in the works?
GE: Currently, we have a 200,000-meter cooperative, an 80,000-meter cooperative, and a 120,000-meter cooperative that will all be moving to AMI soon.
KD: Let’s talk about MultiSpeak, your initiative to get distribution software to talk to each other in a single voice. You recently paired up with IEC’s TC57 Working Group 14 to collaborate on new international integration standards. What’s the importance of this collaboration in terms of rural cooperative AMI systems? Why reach out internationally?
GE: The greater the acceptance of MultiSpeak, the more product choices cooperatives will have. Also, to the extent that the MultiSpeak initiative promotes industrywide interoperability, cooperatives pave the way for smart grid technologies and ensure cooperatives can be part of the smart grid.
KD: How did MultiSpeak start?
GE: About a decade ago, the Cooperative Research Network (CRN), a research arm for cooperatives, identified software integration as an emerging issue for co-ops. CRN convened a group of vendors and proposed a specific software solution to the problem of integration. At first the vendors laughed, but then one of them said, “Anything you can do to reduce the pain of integration.” From that point forward, CRN took a step-by-step pragmatic approach, working with the vendors to reduce the difficulty of integration.
KD: Who uses MultiSpeak, and has it expanded beyond smaller electric cooperatives?
GE:The MultiSpeak initiative has 42 vendor members, including Siemens, IBM and Oracle, as well as two of the larger IOUs. Other IOUs are considering joining.
KD: Where do rural electric cooperatives stand in the overall arena of advanced metering? Are they leaders? Are they laggards? What’s the status?
GE: As the numbers show, with 70 percent of cooperatives employing AMI/AMR systems, cooperatives are clearly leaders. In addition, cooperatives have tackled head on the issue of interoperability and improving communication that will be crucial to achieving greater efficiency and demand reductions through the smart grid.
KD: What progress in AMI do you predict for rural electric cooperatives as they weather the next decade?
GE: We expect that the deployment of AMI will continue to grow as AMI technologies themselves evolve. As AMI and other distribution technologies come down in cost, demonstrate new value, and interact better with other system elements and software packages, more cooperatives will install those technologies in more parts of their systems. Cooperatives have been working and continue to work with vendors to achieve those goals, for example, through demonstration projects and further development of MultiSpeak.
On Glenn English:
In March 1994, Glenn English became the fourth chief executive officer of NRECA. As CEO of NRECA, English sits on Agriculture Energy Work Group’s 25 by ’25 Steering Committee, a group dedicated to increasing energy resources that use agriculture and forestry products.
Before coming to NRECA, English served 10 terms in the U.S. Congress, representing Oklahoma’s 6th District. As chairman of the House Agriculture Subcommittee on Conservation, Credit, and Rural Development, English worked directly on legislation affecting rural development programs, including rural electrification.
English also chaired the Subcommittee on Government Information, Justice, and Agriculture from 1981-89. During that period, the subcommittee monitored the Rural Electrification Administration (REA)–now the Rural Utilities Service–an agency of the USDA.
The MultiSpeak Initiative is a collaboration of the NRECA, leading software vendors supplying the utility market and utilities. The initiative has developed and continues to expand a specification that defines standardized interfaces among software applications commonly used by electric utilities. The MultiSpeak specification helps software products from different suppliers interoperate without requiring the development of extensive custom interfaces.
Originally targeted at small electric utilities and covering a limited number of back-office applications, the effort has expanded to utilities of all sizes, primarily those that supply electricity, but increasingly for those that supply water and gas services as well. To view the current specification and for more information, visit www.multispeak.org.
A smart grid should not be viewed as an end in itself, nor should it be viewed as a tool for promoting markets. If the technology doesn’t benefit consumers, the consumers should not be required to pay for it.