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CEO Forum: Facing the Future

Three CEOs, three business models, one shared outlook.

Fortnightly - June 2012

EVs is the price. Also the batteries diminish in the winter. But we now have people who have driven them 30,000 to 40,000 miles, and they love them. They’re good cars, reliable, and enjoyable to drive. We’re adding more to the fleet.

Also with projections of natural gas prices, we see an opportunity for vehicles fueled with compressed natural gas. The market and applications are different for CNG; it’s good for delivery vehicles and commercial vans. It might have merit in the next several years, with the forecasted price of gas.

Fortnightly: How important will smart charging be for integrating EVs?

Russell: We give customers special off-peak rates, or they can have flat charging rates. From a system standpoint, having the vehicle on our system hasn’t caused any problems, nor do I expect it to. If you plug in your Volt to a normal garage outlet, it’s like plugging in a hair dryer. If you have a higher-voltage charger, it’s like running an electric dryer. Those things don’t seem to cause any problems on our system. I think there’s been more attention paid this issue than is really needed.

Smart charging has potential for the long term. However, we’ve been very deliberate in our rollout of smart grid technology, and the first thing you need in order to use the capacity of vehicle batteries is a grid that can handle two-way communications with the user. There may be potential in the future, but we need to get the smart grid set up first, and that won’t be fully rolled out until 2019. We’re moving forward with it, but in a prudent and measured approach. We performed a couple of pilots, rolling out 60,000 meters this year. The business case is positive for our customers on the electric side of the business, but we haven’t found a positive business case on the gas side.

Fortnightly: What’s driving the business case for electric smart meters?

Russell: The value for customers is that they’ll save money. We’ll roll out efficiency opt-in programs that will allow customers to save energy. And customers will have ready access to the information they need to control their energy usage, if they choose.

Fortnightly: Will you need DR to help manage peak load? Or do you have a lot of excess capacity in Michigan, as a result of the recession?

Russell: It seems to surprise people that we in Michigan have seen a pretty good recovery from the lowest levels of the recession. We were leading the nation in unemployment, with 14.1-percent back in 2009. We’re now at 8.1 percent, and the average in the nation is 8.2 percent. We saw our sales go up in 2010 by 1.7 percent, and in 2013 by 1.3 percent. A conservative estimate is that this year sales will increase by around 2 percent. We’re seeing a significant increase based on historic levels in our industrial load. Michigan is recovering. And last summer we broke a 125-year record for peak load.

With renewable energy coming online, we’re keeping up with demand. But we need