When will smart meters’ day come?

Source: Peter Behr, E&E reporter • Posted: Thursday, May 22, 2014

The smart meter — the grid device with the identity crisis — finds its multiple personalities under examination this week at a conference of utility operators, regulators and technology vendors.

Is it still part of a cool new consumer electronics application that lets customers track their hourly energy usage?Will it ever become a potent energy conservation tool that provides consumers with knowledge needed to cut peak power demand?

Is it an essential part of grid resilience strategies that can help repair crews speed up recovery from natural or man-made disasters?

Or is it an Achilles’ heel, potentially vulnerable to cyber strikes that could turn off thousands of customers in a blink, rattling grid stability?

The questions, if not all the answers, are front and center in this week’s National Town Meeting on Demand Response and Smart Grid in Washington, D.C.

An estimated 46 million advanced meters had been installed in the United States as of mid-2013, according to the industry-sponsored Institute for Electric Innovation at the Edison Foundation. But the spread is spotty.

A cluster of states on the two coasts and part of the Great Lakes region have replaced more than half of customer meters with advanced meters. But in a group of thinly populated Great Plains states, less than 15 percent of meters are the “smart” variety, configured for two-way communication with utility control centers.

Residential and small commercial customers in New York and other states are beginning to benefit from smart grid technologies, including wireless air conditioners and thermostats and other devices, a New York state report noted. Other utilities have run pilot programs to test which technologies and incentives are most likely to alter customer behavior in favor of energy savings.

When the Obama administration seeded smart grid and advanced meter deployments in 2009 with American Recovery and Reinvestment Act funds, proponents hoped the meters would be linked with new “time of use” electricity rates and household displays that would dramatically demonstrate the high wholesale cost of peak, midday power, prompting customers to conserve electricity at those times.

EPB Chattanooga, a nonprofit municipal utility, went all the way to put in an interactive power grid, said conference panelist David Wade, EPB’s executive vice president and chief operating officer. That included not only customer smart meters but a fiber optic network it installed to carry commercial traffic, as well as two-way grid communications that support energy conservation.

The result has been a 60 percent improvement in reliability and a 5 percent reduction in customer bills, Wade said. “All of them have real-time access to [grid] data,” Wade said.

The Edison Foundation has compiled accounts of smart grid installations around the United States in itspublication, “Innovations Across the Grid — Partnerships Transforming the Power Sector.”

It includes the case study of Oklahoma Gas and Electric, which hooked its 800,000 customers into a smart grid that allows them to review electricity usage and other benchmarks hourly.

Ten percent of the customers are in a separate Smart Hours program that provides them with smart thermostats that they can program to curtail power demand when electricity prices rise. These customers’ actions have reduced OGE’s peak load by about 120 megawatts and reduced their bills by 15 to 20 percent.

But when electricity costs typical customers as little as $4 a day, it is hard to catch their attention with promises of cost savings. “The challenge we struggle with is understanding how to bring more value into the equation,” Wade said.

The success stories linking smart meters and time-of-use rates have been limited. “I realize there is very little of it compared to the penetration of the meters than enable it,” said Audrey Zibelman, chairwoman of the New York Department of Public Service, a panelist at yesterday’s conference.

Smart meters and time-of-day pricing are still so new that it’s not clear how consumers ultimately will respond, she added. “Give it another five years.”

Kelly Speakes-Backman, a commissioner with the Maryland Public Service Commission, noted that her state has set a goal of a 15 percent reduction in energy use over a decade ending next year. Getting there has been a struggle, she added, but the pace has increased “with advent of our advanced metering, smart grid system, really bringing the awareness of our customers, their energy use, to actually make a difference.”

But a poll of attendees at yesterday’s conference showed that fear of a political backlash is the most significant factor discouraging time-of-day electricity rates.

Houston-based CenterPoint Energy persuaded state officials to approve a smart meter deployment by pointing to the devices’ ability to shorten restoration of power lines after major storms, because of their ability to pinpoint where customers are out of power.

Grid hardening vs. technology investment

Since Superstorm Sandy in 2012 and other recent weather devastation, however, some utility commissions appear to be giving top priority in rate cases to hardening distribution infrastructure, ahead of supporting investments in advanced grid technologies.

It is one thing to approve spending to protect substations from flooding or to replace wooden power poles with concrete ones in storm-prone areas. It is more complex for regulators to authorize grid technologies that benefit customers by boosting reliability and also reward investors by increasing a utility’s productivity.

Dan Delurey, executive director of the Association for Demand Response and Smart Grid, the conference sponsor, put that issue to Ralph Izzo, chairman and CEO of the Public Service Enterprise Group, whose utility operations were battered by Sandy.

Are utility investments in grid hardening and grid technology in competition with each other to win regulator support? Delurey asked Izzo.

Izzo noted that his company asked state regulators for $2.6 billion for a comprehensive program to boost resilience and defend against storms. It got $1.2 billion. “We were somewhat disappointed that we didn’t get all of it, but we got a good start,” he said.

A little later, Delurey asked why PSEG’s entire package wasn’t approved. “If I knew the answer,” the company would have gotten it all, Izzo said. “It made no sense to me at all.”

Speakes-Backman said, “We talk about resilience and reliability and how to balance one against the other.

“Where I am very uncomfortable is how you balance it all,” she said. “It’s a very difficult thing for us regulators. So don’t be mad at us all the time. We’ve got to balance a lot of different interests.”

Other speakers said the advance of smart grid technologies in residences and businesses is inevitable.

There will be more technology advances that create opportunities for customers to benefit from energy conservation and individual management of demand, they said. “Over the next five to 10 years, we will see real breakthroughs in capturing that value,” said panelist Paul DeMartini, managing director of the Newport Consulting Group. “We’re only at the leading edge of that.”

The challenge is that state regulators don’t have experience with rate models that give utilities full credit for investing in technologies that make the grid more resilient, particularly against low-probability events with potentially devastating effects, DeMartini said.

A cyberattack on smart meters may be a case in point. Experts say that while smart meter installations would be hard for a hacker to compromise, there are vulnerabilities. The meters are designed so that utility control room operators can cut off power individually to customers, relieving power companies of the cost of sending crews out to do the job one by one. This could be an important defensive capability if a utility were forced to shut part of its service area down temporarily in response to a critical cyber or natural threat.

But could a rogue employee or careless vendor introduce sophisticated, destructive malware that could cut off thousands of homes? The risk worries utility representatives and regulators.

“Malicious actors,” said panelist Sue Kelly, president and CEO of the American Public Power Association. “We’re being asked to spend a tremendous amount of money to harden in those [cybersecurity] areas. … That is a ‘disruptive change’ that worries me a lot.”