The Tale of SmartGridCity

This summer I vacationed in Colorado and visited some friends in Boulder. One friend is an engineer who has worked many years there as a Department of Energy contractor. Our common interest in the energy industry led to much discussion. Having covered Xcel Energy’s SmartGridCity for two years, I was anxious to hear what he and his wife thought about it. I was surprised that they don’t participate. They said it would be too much trouble to “save $45 a month on our summer electric bill.” Judging by the size of their house and its many electricity-hungry devices, including two electric golf carts charged in their garage, $45 is probably a small percentage of their monthly summer bill. Even so, he’s an engineer and has worked extensively in the energy industry. I expected he would participate.

David Eves, chief executive of Xcel Energy’s Public Service Co. of Colorado, said the Boulder-based smart grid experiment will not be repeated or expanded, an Aug. 24 article in The Denver Post reported.

What happened to this project that had so much going for it? More than 350 people attended a 2009 DistribuTECH session led by Randy Huston, who at that time was SmartGridCity’s program delivery executive. Huston’s discussion about the initiative included seven people representing Xcel’s technology partners in the program.

That February morning, Huston stressed that SmartGridCity was not a pilot project; it was “bringing the industry’s vision of a smart grid to life.” 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 for Huston’s project that he said would drive grid and customer behavior changes.

It didn’t drive my friends to change their behavior. Xcel couldn’t convince them even to participate. Despite their knowing more than most people about the energy industry, they weren’t interested in managing their electricity to save a few dollars.

Xcel couldn’t elevate the project to more than a pilot to outsiders. The Denver Post article called SmartGridCity a pilot program. Xcel’s Eves called it an experiment. 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.”

The article also said the program’s projected cost nearly tripled to $44.8 million. Xcel understands that 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. 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.

Sometimes projects like this end up somewhere other than their original destinations. I’m sorry SmartGridCity was one of them. Although the project didn’t work as expected, Xcel, its technology partners and the industry will continue to learn much from it. As Eves said, it is producing operational benefits. I suspect some of the customer participants see benefits.

Any company that tries something similar, however, must better predict and manage costs and must find more compelling ways to entice customer participation.

Editor in chief

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