(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit...
Saving The Smart Grid
Hype, hysteria, and strategic planning.
Many utilities have focused their communication efforts about smart grid—to both customers and regulators—extensively on AMI. This makes sense, because meters are the aspect of the smart grid that affects customers in the most direct and tangible way, and regulators gravitate to the new efficiencies and options they offer. Further, many utilities are seeing measurable payback from their smart meter installations.
“Companies are getting real benefits today,” Munday says. “In 2009, Salt River Project saved 82,000 labor hours, not counting meter readings. They avoided driving 443,000 miles and burning 43,000 gallons of fuel. They reduced personal injuries by 39 percent and vehicle accidents by 10 percent. They reduced overdue bills, and are now connecting and reconnecting people in hours instead of four days like they were before. Typically people are happy with it, because they’re seeing greater benefits than they planned for in their business cases.”
But even though the number of angry customers is infinitesimal compared to the many millions of customers served, some companies have found themselves in a battle they weren’t entirely prepared to fight—by virtue of focusing attention on AMI.
“Smart metering has given smart grid a black eye in some cases recently,” McDonnell says. “Not to pick on any specific utility, but some utilities have kind of led with their chin on this issue.”
Talking only or mostly about metering leads consumers to believe that smart meters represent the sum total of smart grid, and as a result their skepticism gets projected onto much broader initiatives that they don’t understand or don’t know about.
Fears about new technology are of course basic human nature, and smart meter concerns run the gamut. Skeptical customers express fear about everything from meter data security—that criminals or Big Brother authorities could use the information to spy on them—to purported health effects of wireless signal waves. In a less regulated industry such as telecom, such concerns are always a small fly in the ointment, but in the utility sector a very small but vocal fringe can have a real impact on the policymaking process. (See “99.9 Earns ‘F.’”)
“It’s total Chicken Little syndrome,” Hickman says. “You’ve got all these people out there talking about privacy and security issues for meter data. But we do billions of dollars of financial transactions on the Internet every day, and you don’t think that this problem’s already been solved to protect meter data? People who are beating this drum and are making this an issue should be tarred, feathered, and shot. This is such a non-issue in our industry.”
Perhaps even more significant is the fact that debate over smart meters can overshadow other aspects of the smart grid that are far less likely to attract any kind of controversy.
“Utilities might have a significant amount of mundane but very important distribution automation work that needs to be done to improve the reliability and efficiency of their network, and that’s not always real sexy,” McDonnell says. “It doesn’t make for good headlines, and it can be harder to sell to regulators because they gravitate to the