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Saving The Smart Grid

Hype, hysteria, and strategic planning.

Fortnightly Magazine - January 2011

higher-visibility pieces of the smart grid.”

And the transition to AMI naturally leads to questions about consumer engagement, pricing models and market structures, all of which carry political baggage and imply behavioral changes that customers will resist. “Presumptions about behavior change need to be carefully examined, because blowback is not only possible, it’s likely,” McDonnell says. “You’re not going to make everybody happy with market structure changes. In fact, you’re going to make some people very unhappy.”

Implementing AMI will no doubt stir up controversy, because most consumers aren’t yet interested in time-of-use rates, home area networks and the like. Engaging them on these issues will be a generational issue for utilities, and it’s proved to be a bigger distraction than many utilities expected it would be. “Everybody is bent out of shape talking about residential meters,” Hickman says. “But what’s more important is for networks to get built so that utilities can make the switches, reclosers, fuse laterals … make all of that stuff smart.”

Although customers’ concerns have nothing to do with substation automation, for example, controversies over smart metering add to uncertainties and delay the whole process.

“Right now we’ve got a whole bunch of people refusing to take the first step, because every issue that could conceivably be thought up hasn’t been addressed,” Hickman says. “We’ll never have all the answers, but we’ve got to start moving forward.”

Lessons From Canada

Not surprisingly, utilities are reluctant to discuss their smart grid problems. We contacted several of the utilities that experienced smart grid setbacks in 2010, and most of them declined to comment. However, one utility that would talk is farther along in its smart grid efforts than probably any other in North America, and its experience to date offers some insight into how companies can coax the smart grid into reality.

Ontario’s Hydro One has already deployed 1.2 million smart meters, covering almost all of its 640,000 square-kilometer service area. Of those, 1 million are now on the utility’s communications network, and it’s currently reading 900,000 meters remotely. Hydro One is also migrating 100,000 customers to time-of-use rates, and will complete the transition by June.

Ontario enjoys a clear advantage over many U.S. utilities, in the form of strong provincial mandates to get off coal, integrate renewable generation and better manage demand. That has removed a lot of the investment case that U.S. utilities have to make to regulators—but Hydro One still has to sell smart meters—and higher prices—to consumers.

“We were given a strong push on smart metering to get customers price signals so they understand what the true cost of power is,” says Rick Stevens, Hydro One’s director of development strategy. “We were able to launch our programs really in support of that mandate.”

Hydro One’s first action was to take a step back and take a broad view of the mandate, asking what it meant to each component of infrastructure, IT and communications. Once the company settled on a plan of attack, it immediately started educating consumers.

“We started bringing in consumers, saying, ‘we’re delivering