The “DG” Pony Is Out Of The Barn!

The horse is out of the barn and running full speed ahead.  The combination of PV and storage will mean “Energy Cost Avoidance” or “Energy Earnings Opportunities”.  This is the equation of 1+1=3 that has been showing up in many energy circles.  Many of the big electrical users have already seen the big picture and are moving quickly to capitalize on it.  More and more have solar PV already and are realizing that by adding storage to the mix, they can save even more money than having solar PV alone.  They are beginning to quickly install energy storage in areas where the demand charges are $15 per KW or higher and can justify the additional cost.  As the storage manufacturers ramp up production and reduce their cost, the present target of $15 per KW will continue to fall and encompass most demand charges presently charged around the country.  This will drive the installation of even more solar PV and storage and the famous California duck curve will begin to appear in all the ISO areas.  Hidden at the core of this growing phenomenon is the “Energy Management System” that can tune and optimize the energy savings per each individual customer’s needs. 

 An accelerant would be reliability issues in a distribution system that pushes customers to PV and storage even faster.  Utilities are already cash stretched and are fighting to hold customers in their distribution systems.  A solar flare event, hacker attack, major storm events, or just plain operational problems could make the need for customers to move to PV and storage the right option to get better reliability.  As the residential customers are saddled with more and more of the cost to offset the departure of the larger customers, they too would look for other options and roof top solar or community solar with storage becomes an attractive choice.  Of course, once they make the choice of going to PV with storage, they will not be back and the utilities will unlikely be able to win them back.  That will put even more cost pressures on those remaining customers who are usually the ones with the least resources. 

 So, what are utilities to do?  They must immediately begin to realize the “cash cow” is being slaughtered and their cut of the pie “IS” or “WILL” shrink soon if they do not innovate.  Energy Efficiency tied with smart energy management will move the duck curve belly deeper and deeper into the evening and night.  Some of the larger smart customers are already beginning to understand that with the right mix of technologies they could leave the grid forever.  Right behind the large users are the residential customers who are installing more and more smart technologies into their homes.  Many customers and utilities will soon learn that this technology is already hidden in most homes buried in the new electronic gizmos that can work together to minimize their grid access needs.  The utilities with still some customer “Good Will” left need to move quickly to position themselves as their customer energy advocate or a supporter working on each customer’s behalf.  Unfortunately many utilities have already consumed their “Good Will” by fighting customer’s moves to renewable energy sources.  These have been very public and largely felt by all customers.  Thus, when the customers have a choice, they will choose to leave rather than support utilities that do not have their interest as its primary goals. 

CAISO considers tweaks to flexible capacity rules as duck curve grows

Wait Just A Moment More…

As I stated in my last blog, “…all you need to do is wait a moment and something else will happen to highlight what you have been saying for years”.

In that blog, it was the Illinois Attorney General’s office report on the ComEd outages last summer which made the claim that last summer’s outages were not unpreventable acts of God, but were mainly caused by years of neglect of equipment and lack of tree-trimming by ComEd.  The latest report faulting a utility for poor maintenance practices comes from Massachusetts.  A recent article in the New England Center for Investigative Reporting, Insult To Injury, states that there has been a quadrupling of major power failures in Massachusetts over the past five years. These major outages were once a somewhat rare occurrence but now have become annual occurrences.

The article goes on to quote Representative Daniel Winslow, “They (the major power companies) are gambling with the weather and they gambled and they lost.”  Representative Winslow has proposed legislation in the Massachusetts House that would result in millions in rebates for customers stuck without power for days on end.  This is growing evidence of the publics’ impatience with more frequent and longer power outages.

The report goes on to say that the Massachusetts Municipal Association has taken a different path than the larger IOU utilities.   The municipalities have more linemen per 10,000 customers than the larger IOUs’.  This is singled out, in the article, as a major reason the municipalities were able to restore power faster after the storms than the larger utilities.  If larger utilities were to match the number of linemen per 10,000 customers to that of the municipalities, the large Massachusetts utilities would need to hire an additional 613 new linemen.

To further back up these claims of poor grid maintenance, the report turns to a couple of academics, John Sterman, a professor at the MIT Sloan School of Management and Massoud Amin of the University of Minnesota.  John Sterman was quoted in an article in the Boston Globe, John Sterman on the Great October Snowstorm: Utilities need to cut trees, not costs where he states, “The US electric grid is failing. From 1991 to 1995 there were 41 outages affecting more than 50,000 customers each, but nearly 350 from 2005 to 2009”.  In the same article, Massoud Amin is quoted as saying, “Building a smart grid would cost $17 billion to $24 billion per year, but generate benefits of $69 billion per year from greater reliability and efficiency while cutting carbon emissions and stimulating the economy”.

These types of conversations are beginning to have an effect and several states are now considering legislation to fine utilities for outages.  But, you say in your mind that this could not happen.  Yet, as an example to this, the article states that since 2010 airlines can now be fined $27,500 per passenger for tarmac delays exceeding three hours.  It is noted in the article that since enacting the airline law, delays have fallen dramatically.  Needless to say, everyone wants to kick the utilities over their growing frustration with more frequent and longer outages, so such laws are a real possibility.

I for one, have been saying for years that utilities need do their homework and realize that the smart grid is really about better reliability and efficiency.  Those utilities that are still waiting to see what happens with smart grid development need to realize that there are bigger fish to fry than just reading meters.  The early AMI adaptors have recognized this for years and have already made their moves.  The remainder of the industry still waiting to see what will happen may already be in trouble and sliding down the slippery slope.  A good indicator that you are on the slippery slope is the growing public anger over the increasing frequency of outages.  These outages could become even more frequent if impacted by the Solar Maximums which is just beginning its peak cycle.  The Solar Maximums will continue into 2013 and the sun is the biggest influencing factor on weather.   Couple it with the increased pollution in the atmosphere and you may have a very toxic mix.   All of this on top of the public’s mood of not being very tolerant of continued excuses.  Utilities will need to utilize every tool they can to stay in the game going forward.  But, I don’t think utilities, which are still waiting, are sure which quarter it is and how much time is left on the clock.

The “Flawless Game”: The Candlestick Park Incident

I chose this title after reading an article in the San Francisco Chronicle:  “PG&E: New power line will pass Candlestick test“.  The article points out some of the issues that many utilities are facing with their smart grid initiatives.  According to the article, PG&E spent about $980,000 to ensure that the upcoming playoff game at Candlestick Park would not embarrass them again.  After I read the article, the choice of words used by the “company representative”, quoted in the article this should be a “Flawless Game”.  It got me thinking.

As an overview, let’s look at the resources and actions PG&E put forth to ensure that this would be a flawless game.  This effort, according to the article, took about 60 workers, the replacement of 8,700 feet of 3-phase line and moving 750 homes to a different power line circuit.  My guess is that the outages actually cost PG&E well over $1 million and I arrive at that number thinking they probably did not include the emergency crews and expenses from the actual outages.  Either number you use shows PG&E was willing to put these funds and efforts on the line to insure a “Flawless Game”.

The interesting thing about the two outages is they were caused by issues on the PG&E side as well as issues on the customer’s side, the city of San Francisco’s Recreation and Park Department.

On the PG&E side, the use of “bump sleeves” is a very common industry practice and used throughout the electric line industry.  When a line breaks, having the luxury of replacing the whole line as they did here is not the typical option.  Wire breaks are routinely repaired by applying these “bump sleeves” and the crews move on.  After further investigation of this line, PG&E found three other “bump sleeves” on the lines that were “warmer” than normal.  From my past experience, this situation shows that the line was probably old and in dire need of replacement, which they did after the fact.  This very public issue along with the 2010 explosion of the natural gas pipeline in San Bruno, to me, indicates that PG&E has lowered the risk threshold it’s willing to take concerning maintenance and safety.  I make this observation because these very public incidents occurred on both sides of the utility’s operational arms, the electric and natural gas side.

On the city of San Francisco’s Recreation and Park Department side, poor maintenance of key equipment along with poor strategic decisions compounded the embarrassment of the Monday Night fiasco.  Failures will happen and a good routine maintenance plan for the generator switches could have caught the failure before it happened.  Most backup generators are exercised weekly to verify proper operation.  Only the maintenance records at the park department could confirm if a routine maintenance plan was in place.  Their strategic decision failure came with the use of lights which have a well-know property of long cool down and start up delays.  For a national stadium like Candlestick Park, you would think that someone should have pointed this out some time ago and they should have looked into having some kind of battery backup system to hold the lights on during short outages to prevent exactly what happened during the nationally televised game.  My guess is that when it was discussed, the park department more than likely due to funding cost chose to lower their risk threshold and decided against a backup for the lighting system.

Now back to the title, “The Flawless Game”.  I find it ironic that PG&E is facing all of this public humiliation at a time when it wanted to be recognized as a leader in smart grid implementation.  But again, there seems to be something in the statement made by Geisha Williams, PG&E’s executive vice president in charge of electric operations, “My team has really stepped up and made some incredible things happen, and over the holidays even.”  This was quite an effort and expense put forth by PG&E for a one-time football game while festering issues continue to eat at the real game, PG&E’s growing customer dissatisfaction.   The “Flawless Game” use to be played for all its customers, but due to poor decisions, the game seems to be quite flawed and very public.  Past cost cutting decisions are now being questioned and maintenance and safety practices seem to have been put at a lower risk threshold within PG&E and the effects of these decisions are showing up at a time when they wanted to be hailed as an industry leader.  I believe this is yet another look at the utility industry’s problem of implementing the smart grid and getting the public to buy in.  Increased outages and flawed service are high in the minds of the utility customers and is helping to escalate the pushback on smart grid implementations and raising questions as to who should pays for it.  I’m not sure yet, but my bet is that shareholders picked up the cost for the line upgrade to Candlestick Park.  It might get buried into other maintenance cost at PG&E since $1 million is small potatoes in their overall budget.  But, it would not surprise me to see someone in the public sector checking into the records to see who actually picked up the cost for the repairs at Candlestick Park.

Even more ironic, PG&E has not used the Candlestick Park incident to help further its need for a smarter grid.  As I stated earlier, “bump sleeves” are in common use throughout the electric utility industry and probably exist in numbers of at least tens of thousands if not hundreds of thousands on the PG&E system alone.  There were four that we know of, on the 8,700 feet on the old Candlestick Park line.  The PG&E website says they have 141,215 circuit miles of electric distribution lines which calculates to well over 745 million feet of electric distribution lines.  Could the smart grid have predicted or even better yet prevented the Candlestick outage, I believe yes.  These “bump sleeves” are a common electric service disruption point which usually has a predictable failure sequence before they fail.  Smart equipment along with smart analysis would be able to detect and predict many such failures if the equipment is deployed and implemented correctly.

The movement of 750 homes from the feeder circuit for Candlestick Park was a loading situation which should have been detected much sooner.  Yet, most utility engineering departments are undermanned and most likely technology starved and have not yet benefited from the smart grid efforts.  The movement of this many homes from the circuit says that the line was over loaded or close to it.  This issue seems to have not been caught until after the fact and brought to light after the two outages were analyzed.  Good data from smart equipment and smart analysis would have alerted PG&E to the fact of the overload circuit as well as detecting the increasing momentary outages on the circuit caused by the progressive failure of the “bump sleeve”.

Another issue was a customer service failure where PG&E could have, prior to the incident, worked with the park department’s team and offered recommendations and help with the lighting system.  If you have a good working relationship with customers then these opportunities should have been there when the lighting system was upgraded.  PG&E could have offered recommendations for a battery backup system which they have had deployed in other places on their system for years.  But, that effort would require having two-way conversations with the customer.  May be it was not seen as technology sexy as electric vehicle charging stations to the marketing departments.  Yet, it definitely got national attention on that Monday Night of the incident.

The big missed opportunity was to go on national TV and have a PG&E spokesperson step to the microphones of the frustrated sports announcers and make statements about the benefit of deploying the smart grid and its need in helping to detect and prevent events like what had just happened.  That requires a consistent message backed by good business metrics and employees trained to speak with one voice in order for this strategy to be carried out successfully.  This, as we know, is one of the main areas of failure by utilities in their efforts at deploying the smart grid.  This just shows as with everything, if you’re not ready, “Opportunity Passes”.

My intent here is not to point fingers and lay blame, but instead to use this opportunity to encourage new thinking.  Opportunities happen each and every day, but without strategic thinking or proper analysis you will continue to be stuck behind the eight ball on smart grid.

Fire Risk Rises in Parched California – (WSJ)

Fire Risk Rises in Parched California – (WSJ)

The dots just keep on popping up around the world.  I see this in direct relationship to the other articles I’ve pointed out.  We talk about global warming but I’ve not heard much about global warming coupled with extreme solar storm activities.  As this solar cycle is expected to be larger than anything we’ve seen in modern times, are we already seeing the results as this cycle begins the ramp up to its maximum?

Excerpts from this article below:

 California is gearing up for what officials say could be a catastrophic wildfire season following what so far has been one of the driest winters on record.

 “We haven’t seen this kind of behavior in over 30 years,” Mr. Berlant said

 In a Jan. 3 snow survey, the Department of Water Resources recorded California’s snowpack at just 19% of its average for that date. Many parts of the state have received almost no measurable rain since November.

 Are we really preparing or setting ourselves up for failure:

 “A dry fire season could swell firefighting costs in California, which is still pulling out of a deep recession. Buoyed by abundant rain and snow last winter, the state cut emergency funds for wildfire-fighting to $131.2 million, compared with a recent high of $500 million in 2008, a year in which the state saw a major drought.”

More Unusual Weather Issues Seem To Backup Evidence That Something Is Going On

Referring back to my last blog on solar flares, I continue to be running into more information that keeps pointing to shifts in weather patterns that are showing up in ways that we normally do not see or pay attention to. Flights from Europe to the US are making more unscheduled fuel stops due to unexpectedly stronger head winds that the airlines have not seen over the last 10 years. The WSJ article puts most of the reason for the increase in these unscheduled stops on the use of smaller planes by the airlines and pushing them to their range limits. Yet, it also notes that the headwinds are much stronger than what was averaged over the last 10 years.

“Headwinds returning from Europe are more extreme than we have seen in 10 years,” said a United spokeswoman. For the past decade, December headwinds averaged 30 knots, according to United data. But last month, the winds averaged 47 knots, and, on the worst 15 days of the month, 60 knots.

In another section of the article it states:
“The fluky weather pattern, which AccuWeather.com meteorologist Henry Margusity blames on La Niña, or cooler-than-normal equatorial ocean temperatures in the Pacific, has also created problems for other airlines using single-aisle 757 jets across the Atlantic. ”

The issue of note for me is that the average headwinds have increased by over 56% compared to the past 10 year average headwinds. The worst 15 days were 100% stronger than the last 10 year average. For me, this is pointing to the bigger picture that something new is happening which we have not yet connected the dots on. I’m not a catastrophe event chaser, but news articles like this are causing me concern that we are missing forewarnings of upcoming events that will impact us much more radically than we realize. At times of unknowns, I prefer to go back to my old boy scout motto of, Be Prepared!

There’s No Bad Weather? Yet Long Outages Are Still Happening. What’s Your Excuse This Time?

I’ve been picking up recent rumblings about the start of a new 11 year Solar Storm cycle.  It seems that NASA first warned in 2006 to expect more extreme solar storm cycles this time around than we have experienced in the past.  A team of researchers stated in NASA’s Science Newsletter dated March 10, 2006:

 “This week researchers announced that a storm is coming–the most intense solar maximum in fifty years. The prediction comes from a team led by Mausumi Dikpati of the National Center for Atmospheric Research (NCAR). The next sunspot cycle will be 30% to 50% stronger than the previous one, she says. If correct, the years ahead could produce a burst of solar activity second only to the historic Solar Max of 1958.”

 The same article discusses the sun’s conveyor belt theory and quotes a solar physicist David Hathaway of the National Space Science & Technology Center (NSSTC).  The article goes on to say:

 “Like most experts in the field, Hathaway has confidence in the conveyor belt model and agrees with Dikpati that the next solar maximum should be a doozie.”

 Their only disagreement was when this solar Max would happen, “But he (Hathaway) disagrees with one point. Dikpati’s forecast puts Solar Max at 2012. Hathaway believes it will arrive sooner, in 2010 or 2011.”  NASA has basically been quiet on this issue until this month when they again warned of the possibility of more extreme solar storms during this cycle. 

The internet bloggers who follow this are of course humming with predictions. Yet through all the noise, what seems to be a consistent but a hidden message is that the economically destructive potential of these solar storms could be many times greater than that of Hurricane Katrina that hit New Orleans because of the impact these storms could have on our electronic technology.  Sitting in the middle of this path of damage is the electric grid stretching across our nation as well as other grids around the world. This new cycle’s potential is being compared to the one that occurred in 1958 before our latest technological advances were widely available. 

 

In a NASA news topic dated 11.10.11, the following statement is made about solar storms:

 “But it is a problem the same way hurricanes are a problem. One can protect oneself with advance information and proper precautions. During a hurricane watch, a homeowner can stay put . . . or he can seal up the house, turn off the electronics and get out of the way. Similarly, scientists at NASA and NOAA give warnings to electric companies, spacecraft operators, and airline pilots before a CME comes to Earth so that these groups can take proper precautions. Improving these predictive abilities the same way weather prediction has improved over the last few decades is one of the reasons NASA studies the sun and space weather. We can’t ignore space weather, but we can take appropriate measures to protect ourselves.”

 With hurricanes Katrina and Irene that hit the east coast last fall, we could predict the time they would make landfall, but their full impact was not known until after they had hit.  Many utilities thought they were ready for the hurricanes, yet they weren’t able to prevent the impact on things they had not thought through.  Hurricanes knock down wires and poles, and they floods substations.  Solar storms, in contrast, knock out electronic equipment as well as transformers.  If they know the storm’s potential ahead of time, utilities could have to shut down the grid to prevent the damage to major transformers.  My guess is that they won’t do this and the resulting damage from these storms will bring destruction we’ve not seen before.  The extreme weather patterns we have recently experienced may just be the forerunners of this pending solar cycle.  In the past, scientist have not had the tools to make the connections between solar storms and weather patterns.  Extreme weather patterns may provide the scientific evidence of pending extreme solar storms, and this may be the reason we’ve now been seeing such extreme weather patterns like we have not seen in the past 50 to 100 years. 

 Solar storms knocked out a Hydro Québec generating station in Canada on March 13, 1989.  Six million people were without power for 9 hours because the storm brought their entire grid system to its knees.  The effects of the storm reached across Canada and all the way to New Jersey where it melted power transformers.  Yet, the largest recorded event happened in September, 1859 when:

 “Just before dawn the next day, skies all over planet Earth erupted in red, green, and purple auroras so brilliant that newspapers could be read as easily as in daylight. Indeed, stunning auroras pulsated even at near tropical latitudes over Cuba, the Bahamas, Jamaica, El Salvador, and Hawaii.

 Even more disconcerting, telegraph systems worldwide went haywire. Spark discharges shocked telegraph operators and set the telegraph paper on fire. Even when telegraphers disconnected the batteries powering the lines, aurora-induced electric currents in the wires still allowed messages to be transmitted.”  

This brings me to my reason for writing this blog about solar storms.  With the deployment of AMI and new smart grid equipment, we may be in for a new round of power outages that could happen at any time.  Reading the section about the telegraph machines elevates my concerns about how well all of the new electronics will survive these electrical surges brought on by solar storms. The problem will not only be with smart grid equipment but most modern communications and electronic devices will also be impacted.  Thus, the concern about the economic impact as well as public hysteria if such a storm was to strike again.  At best, we may have a day’s warning, or perhaps only hours, before one of these storms makes its way to earth.  Yet, I’ve not heard anyone, outside of the internet bloggers, talking about this issue.  With the potential of something as major as this hitting us in this economy, you would think that someone of authority would be raising the alarm.  I’m basing my concern on the way the utilities handled the hurricane warnings and storm preparations last fall, and I think the impact of a solar storm will likely take the public by surprise.

Having worked in the utility industry for the last 30 years, I’m personally aware of surge testing and have personal experiences with real electric distribution surge damage.  A case in point was a call I received from my wife who was viewing the explosion of an electrical transformer on a utility pole.  She asked if this was an electrical flash, because the sky was filled with bright flashes like fireworks as the transformers were being destroyed.  She was really impressed by the light display as was everyone else near the incident.  Now imagine this scenario happening all across an electrical grid.  It would knock out hundreds, if not thousands, of transformers at the same time.  Yes, that would definitely be a major news event . . . if you had electricity and could see it on the news.  Now imagine all the power being out until those transformers could be replaced.  Those repairs would not happen overnight and modern life, as we know it, would come to a standstill until the work was completed.  If this would occur during a high electricity demand day, the damage could be many times worse.  The grid equipment would already be close to maximum capacity and would then be hit with additional surges that could greatly exceed the maximum ratings of the equipment.  Also of concern would be public safety because of the opportunity this stray current would have to leave the distribution systems and enter anything electrically connected to the grid.  These scenarios are very frightening.  That is why I’m concerned when it seems that no one of authority is raising any real concern about this pending disaster.  Even if I’m wrong and it does not happen, leading scientist are saying the potential still exists.  Safety begins with preparedness and preparedness begins with making information available to the public.  Being in the dark about the event and then standing in the dark with no information or communications afterwards is not a good scenario to imagine.

I encourage utility workers who read this blog to raise this question within your organization and find out what your utility’s plans are if they are informed by NASA that a solar storm is headed our way.  With many key workers retired or retiring, are there any active plans to handle such an event?  If a major storm like the one that occurred in 1859 is projected to hit again, the ultimate action required by utilities to save their grid may be to shut it down completely.  This would have to happen within hours, or even minutes, depending upon how much advanced notice is given.  Another of my concerns is that even if a plan to shut down the grid exists, who would give the order to execute?  If utilities are caught with equipment online during such a storm, the damage to its grid may take weeks, if not months, to repair.  In the meantime, the public could physically be in the dark as well as in a communications blackout. This will only lead to more dissatisfaction and anger with the utility industry.  This is an industry issue and will affect all IOU’s, COOP’s, and municipalities because we all live under the same sun.

Just When You Thought It Was Safe To Wade Back Into The Smart Grid Waters

It has never ceased to amaze me how frequently the utility industry inflicts pain upon itself.  It seems as though they just keep shooting themselves in the foot on purpose.  Unfortunately, when one of them shoots themselves in the foot, it oftentimes damages the entire industry’s reputation.

Case in point, the very recent actions by BGE and the article, “Energy-saving plan angers BGE customers as AC goes out“ from The Baltimore issue dated Sun July 23, 2011.  These actions put a major nail in the coffin for the consumers’ future uncontested acceptance of smart grid initiatives.  It is like a sad comedy of errors, and I believe it will cause a major, if not impossible, hole for the industry to climb out of.

With the smart meter backlash and Opt-Out movements going-on across the country, this could not have come at a worse time for the industry.  Considering all of those utilities who have worked hard to win the trust and hearts of their consumers in Smart Grid and Home Area Networks (HAN) concepts and technologies, it saddens me to see so much of their hard work go down the drain.  They will now have to work 4 times as hard just to maintain their present position in the avalanche of negative press that will flow from this.

It is really hard to know where to start to repair all of this backlash because it is almost too unbelievable.  With all the negative press about smart meters and Opt-Out issues already simmering, the recent heat wave has just unloaded additional fuel on the firestorm of negative customer perceptions out there.  They have invented “Smart Grid Frankenstein” for every utility in the country.

First of all, in the Baltimore Sun’s article, a section states:

“The extreme heat triggered the first “emergency event” in the four-year history of the program, and the effects were different from what customers had come to expect — many wondered why they couldn’t override the shutdown.”

Note, “the effects were different from what customers had come to expect“.  This means that the program that customers had signed up for did not live up to their expectations.  Marketing 101 tells you that when this happens, the product is dead in the water.  The second part of that section then hammers the stake in the heart:

“..many wondered why they couldn’t override the shutdown.”

What we are talking about here is a Demand Side Management (DSM) program that went into effect and then, during the worst heat wave in 4 years, allowed end-customers air conditioners to be shut down for up to 10 hours.  If you have been reading the same backlash articles I’ve been seeing, then you know that this is the one thing that all smart meter/grid opponents feared – a  utility taking control of their equipment and then not returning it to the customer’s control in an emergency.  The privacy groups will have a field day with this situation, and I think you will see litigation as a result since some households were put at risk during the crisis.  We can only pray that the utility’s actions caused no personal injuries during this heat wave.  It may still be too early to know the full ramifications for sure, but you can bet that the legal bagels are all over it.

Unfortunately for the industry, it will not just stay in Baltimore but will travel the nation, if it has not already done so.  The article also stated,

“Customers complained en masse Friday — on social networking sites, over the phone and by email — about the company’s energy-saving program. Many people thought that the program was misrepresented in promotional materials.”

Unlike Vegas, what happens at one utility does not stay at that utility. This will be hitting the newswires once the media runs out of deficit spending, phone hacking, and madmen news to report.  It will certainly surface at every future PUC public hearing when a utility wants to implement smart meters or DSM programs.  Remember, the customers in Baltimore got a different effect than what they had expected.  No amount of marketing spin or tap dancing is going to erase that from the minds of the conspiracy theorist or privacy advocates.  Every energy management program devised by utilities will have to jump through new hoops, and the old marketing gimmicks will no longer work.  Not many of them, if any, were really working anyway.  (California Utility HAN Numbers: Very Low)

I implore you to read the article and see if it strikes you as hard as it did me.  Mark my words, this has happened before, and, once again, the results will not be pretty for utilities.  Each utility had better come up with a new plan – and come up with it quickly.  I have already begun to adjust and position my strategies and thinking in light of this event.  You can bet that the opponents have their guns loaded with this new ammo and pointed at Smart Grids and Home Area Networks.

I realize that most utility employees are trying their best to do their jobs, but it seems like a new breed of fix-it leaders are marching the utility industry down the path to a self-fulfilled Armageddon.  Many new faces have emerged in the industry with ideas that may look great on the surface, but they seem to fail to realize the sensitivity of the markets served by utilities.  These dominant voices start speaking and have all the right annunciations and presentations but lack the basic industry facts.  Utilities are businesses that are allowed to be oligopolies with restraints that result in close public scrutiny when things go wrong.  There are issues that utilities need and want to undertake, but they must not take on unnecessary or reckless risk.  The unfortunate incidents in Baltimore will play out across the country and, every utility will have to now rethink its’ strategy and presentation on Smart Grids.

Commentary – March 10, 2011: CPUC President Michael R. Peevey’s Statement on Smart Meters

The President of the California Public Utility Commission (CPUC) issued a press release that I have given the linked for below.  He is suggesting that smart meter opt-out customers pay an additional cost for reading their meters.

March 10, 2011: CPUC President Michael R. Peevey’s Statement on Smart Meters

“In other words, I am directing PG&E to prepare a proposal for our consideration that will allow some form of opt-out for customers who object to these devices at reasonable cost, to be paid by the customers who choose to opt-out. I’ve asked to have it within two weeks.”

My past experience with reading utility meters with boots on the ground is that the highest part of the cost it is getting the meter reader to the sites to read the meter.  Once on location, the variable cost to read meters drops because they are reading each meter at that location. That is how the efficiency for manual readings is gained.

If you are not reading all the available meters at the location but just reading a few, then the efficiencies are lost and the cost to read remains high.  It will be interesting to see the model PG&E comes up with since the smart meter objectors do not want their meters changed and most do not want any RF meters.  This would require the meters to be read manually.  Because the meter reader will have to pass by AMI meters to read only the opt-out meters, this takes on what we call the rural reading model and is the most expensive reading option.  Based on the statement Mr. Peevey gave in the press release, it will be interesting to see what pushback comes once the cost of this option is given to the opt-out groups.  It will be even more interesting to see how many of them really opt-out of the AMI deployments and continue to pay the additional charges.

My best rough guess for a manual rural reading is that it could add about a $5 monthly or higher charge to the opt-out end user’s bill.  It does not sound like much on initial take, but that could be a additional $60 annual cost to the opt-out end users bill.

This will have a direct impact to utilities looking to roll out AMI deployments in the near future.  This will change many of their business models and may sink many of these plans until this opt-out issue is addressed.