(November 2009)Regulators are in the unenviable position of determining an allowance for ROE that’s fair to consumers and investors in a volatile economy. The cases that stand out this year...
Summer of Discontent
Smart-grid planners feel the heat.
Gov. Martin O’Malley (D) is campaigning on a theme of green jobs, while former Gov. Robert Ehrlich (R) accuses the O’Malley administration of killing jobs with anti-business regulations. Against this backdrop, BGE petitioned for expedited re-hearing and amended its plan to address the PSC’s concerns—most notably by deferring and limiting BGE’s proposed capital-expense “tracker”; making time-of-use rates voluntary instead of mandatory; and proposing a customer communication and education plan. The commission agreed to schedule hearings for early August.
Meanwhile, in the aforementioned Westerville, Ohio, the city council voted in a closed-door meeting on July 20 to postpone a final vote on the municipal utility’s federal stimulus-funded smart-grid project. Chairman Mike Heyeck announced afterward that the postponement would allow the council to field questions and comments from Westerville residents, and to “provide additional opportunity to learn more about advanced metering” via a series of public events and outreach efforts. The council’s decision came in the wake of growing public discontent, expressed at a July 6 city council meeting, where the residents who showed up spoke overwhelmingly against smart meters. ThisWeek newspaper quoted resident Charles Voight Jr., “This process seems to have been predetermined, with the grants being applied for without the public giving their full consent. I personally will not let you into my home, remember that.”
Andy Boatright, electric utility manager for the city of Westerville, told Fortnightly that many of the 30-plus people who have expressed opposition to the project have focused on the federal government’s role. “I think it’s primarily a function of the federal grant,” Boatright said.
And further west, Xcel Energy awaits a decision by the Boulder, Colo., city council on whether to recommend that voters renew Xcel’s utility franchise. That’s right; the celebrated Smart Grid City might actually walk away from its utility partner.
Xcel’s 20-year agreement expires at the end of 2010, and the utility wants Boulder to sign up for another 20 years. But surveys indicate voters would reject such an agreement, as well as an alternative plan that would impose an excise tax on Xcel—which the company would pass through to customers in monthly bills. Council members reportedly are considering municipalizing Boulder’s utility services if voters reject both initiatives.
Cold Beer and Reality TV
Negative public sentiment over Xcel’s franchise agreement might be tied to the company’s Smart Grid City project, which has encountered its share of problems—from ballooning capital costs to disappointing participation in its demand-response program. Xcel CEO Dick Kelley told Fortnightly in June, “There’s huge value on the utility side of the meter, but it hasn’t been that successful on the customer side. I guess some people thought Boulder residents were super-environmentalists, but in fact they just want their TV to work and their beer to be cold when they get home.”
Of course, such truths shouldn’t surprise anybody in the utility industry; the regulatory compact ensures reliability is our overriding goal, and the smart grid doesn’t change that. What the smart grid does change, however, is the need for sophisticated customer communications strategies.
“Utilities are trying to deploy new technology