Rethinking the Electric Grid

Topics Firstly it is about the Mindset Ancient & Modern History What the Heck is Smart Grid? The Status Quo is not So Great Wicked Smart Vermont The Payoff Pitch 8/19/2010

Mindset Before Technology My goal is to cause you to revisit your assumptions Are consumers of electricity the same as they were 10 or even 5 years ago? What have we sought to accomplish and what have we wrought from our policies? Are the “enemies” the same as they were 30 years ago? 8/19/2010

Historical Context Ancient History Grid Built to be Central Station Driven Bundled Investment Made on Behalf of Consumers & Society Investment in Long Lived, Predictable Assets Retail Rates Expected to be Stable Rate stability valued above rate accuracy

Historical Context Modern History Renewable goals Use energy more efficiently, use less electricity, rate decoupling Reduce carbon emissions Bar raised on grid reliability

What is Smart Grid? Perhaps an unfortunate descriptor for it implies that the current grid is dumb In reality it is the sum total of many components Enhanced operational control Consumer empowerment Think of it as the digital automation of the electric grid In this slide I want to challenge the audience to “clean the attic” of traditional thought about electricity delivery

The Realms within Smart Grid Hard Assets- Meters, Switchgear, Communications and Data Consolidation Systems Human Element- Adaptation to New Technology and Business Process Change

What is Smart Grid? “The lack of contemporary information and communication functionality has been a key factor in preventing utilities from moving to 21st century business functionality among thriving American industries.” Source: West Penn Power, Smart Meter Technology Procurement and Installation Plan, August 14, 2009

What is Smart Grid? “We are an industry that provides customers with no information about our product and offers virtually no choices.  We have trained our economy to believe that multiple day outages are unavoidable and that there is no cost associated with a "least cost" grid and heavily carbon-based supply sources.  This technology calls all that into question and it is time.” Source: A CEO of a major Midwest utility

It’s Peak Demand Stupid The Grid is Economically inefficient Due to Lack of Price Discipline at the retail level 2/21/11

Smart Vermont Snapshot 315,941 AMI connections via digital meters & web presentment Distribution automation via a mixture of solutions including 828 automated regulators, 187 feeder monitors, and 198 remote fault indicators GMP, CVPS & Burlington Electric Dept. installing MDMS

Smart Vermont Snapshot Total project cost $166 million, 50% ARRA funded Collaboration of all distribution utilities with VELCO as grant facilitator and project manager Meter data collection first via mesh network Intermediate backhaul either fiber or 4G wireless Variable pricing trials follow infrastructure build-out

The Payoff Pitch Peak Demand Costly to Consumers & Society Established Regulatory Regime not Economically Efficient Consumers Currently Paying for Policy Mandates More Electricity Use Can be a Good Thing

Resources “Principles of Public Utility Rates”, James C. Bonbright, Albert L. Danielsen , David R. Kamerschen “Advanced Metering Initiatives and Residential Feedback Programs: A Meta-Review for Household Electric- Saving Opportunities”, Karen Ehrhardt-Martinez, Kat A. Donnelly, John A. “Skip Laitner, June 2010 http://www.aceee.org/research-report/e105 “Smart Grid Strategy: How Can State Commission Procedures Produce the Necessary Utility Performance?” Tom Stanton of NRRI, February 2011 http://www.nrri.org/pubs/electricity/NRRI_smart_grid_strategy_feb11-05.pdf

Resources “THE ETHICS OF DYNAMIC PRICING”, Ahmad Faruqui, Ph. D. The Brattle Group, March 30, 2010 “Rethinking ‘Dumb’ Rates, Achieving the Smart Grid’s Potential Requires a Revolution in Electricity Pricing.” Rick Morgan, Public Utilities Fortnightly, March 2009. http://www.fortnightly.com/exclusive.cfm?o_id=158

Questions ? David J. O'Brien Director of Regulatory Strategy & Compliance BRIDGE Energy Group Inc. 508.281.7133 x210 | M: 802.522.0917   DOBrien@bridgeenergygroup.com   www.BridgeEnergyGroup.com