Electrical Manufacturers Warn Against “Aggressive” Smart Grid Strategy

While praising the Obama administration’s push to develop smart grid interoperability standards, leading electrical equipment manufacturers have warned of risks to their industry and utilities from the administration’s “aggressive strategy” if the National Institute of Standards and Technology (NIST), an agency of the Department of Commerce, does not work closely with affected companies to ensure that new standards are compatible with components already installed in the grid.

The concerns were raised in the wake of the administration’s announcement of the first 10 interoperability standards at a May 18 White House meeting at which top industry officials met with Energy Secretary Steven Chu and Commerce Secretary Gary Locke to discuss the path forward for smart grid deployment.

The interoperability standards are vitally needed to ensure that computer software, wireless devices and grid-installed components can effectively communicate with each other to achieve key smart grid goals, such as allowing consumers to adjust electricity consumption in response to real-time price signals.

Industry officials were generally upbeat and supportive of the administration’s efforts to spur industry consensus and federal action on interoperability standards, which they said had been languishing in bureaucratic backwaters for too long.

However, officials at the National Electrical Manufacturers Association (NEMA), the lobbying group for the equipment makers, revealed that some industry officials raised concerns at the White House meeting about how the initial 10 standards issued by NIST had been developed.

In particular, officials at Itron Inc., a leading maker of smart meters, expressed concern that some of the new NIST standards did not recognize an existing American National Standards Institute (ANSI) standard that has been widely used in the installation of smart meters to date.

“Some of the installed base [of smart meters] is based on that [ANSI] standard,” said Kyle Pitsor, vice president of government relations at NEMA. “We want to make sure that they are not made obsolete” by the new NIST standards.

NEMA alluded to the so-called “backward compatibility” issue in a June 1 press release and spoke more directly about it in a May 22 letter to Chu and Locke from NEMA president and chief executive Evan Gaddis and top executives at Itron, General Electric, ABB North America, Siemens and other leading electrical equipment manufacturers.

“The emphasis to date has been on the speed of standards adoption,” Gaddis said in the June 1 press release disclosing the letter to the administration.  “We simply need to make sure that the secretaries and the administration consider the risks that an aggressive strategy has on the bottom line for both our manufacturers and the utilities.”

The May 22 letter to the secretaries suggests that NIST has failed to set up a clear process for consulting with industry on standard-setting or explaining how it will select standards.

“As NIST establishes the panel that will maintain the smart grid roadmap, it must identify adequate means for accepting candidate standards for consideration, a method for accepting input from the electro-technical community on those standards, and a transparent method of decision-making to achieve consensus,” the industry executives wrote.

The letter also said NIST and other federal agencies involved in the smart grid effort had to be sensitive to the backward compatibility issue.

“To expedite smart grid adoption, interoperability standards endorsed by NIST should, as much as possible, weigh the trade-offs between new features and backward compatibility with existing standards and protocols which are embedded in the installed base of the grid’s hardware, software and communication devices,” the executives said. “This consideration should be extended to all federal agencies that deal with rulemaking procedures that could impact smart grid adoption,” including the Federal Energy Regulatory Commission, Consumer Product Safety Commission and the Federal Communications Commission.”

The letter also said NIST must consider harmonizing its standards with those used overseas, saying the issuance of differing standards could impose “an undue burden on manufacturers and could actually slow the adoption rate of smart grid.”

NIST did not respond to a phone call seeking comment on the NEMA letter.

The backward compatibility issue is particularly difficult for smart meters because the technology has been quickly evolving in response to utility desires for more functionality in those devices, which they are installing in the millions at a relatively hefty cost to ratepayers. Thus, interoperability standards must accommodate both newer meters that offer more functions and older meters already installed by utilities that were ahead of the industry curve on smart grid adoption.

The installation of smart meters is central to the smart grid revolution because they are the link between customers and the grid, and Itron is increasingly a major player in the sector. The Washington state–based company claims it is the No. 1 player in the U.S. market, having sealed deals with San Diego Gas & Electric for 2.3 million meters; Houston-based CenterPoint Energy for 2.4 million meters; Detroit-based DTE Energy with 3.3 million meters; and Southern California Edison for 5.3 million meters, some of which already are installed.

However, Landis+Gyr in early June announced a five-year advanced metering contract with AEP Texas, a unit of American Electric Power Co., and the New York–based company also has scored big contracts with Texas utility Oncor, Washington, D.C.–based Pepco Holdings and California utility Pacific Gas and Electric Co.

Commonwealth Edison, the utility subsidiary of Exelon Corp., last week joined the list of utilities launching major meter deployment efforts. The Chicago-based utility said it was submitting a plan to state regulators to install 141,000 meters in 11 suburban communities and Chicago as a broad test of the technology and its benefits.

While most state regulators have agreed to smart meter installation, some remain skeptical of the benefits to ratepayers, and utilities that have installed older meters have faced criticism from some consumer advocates.

—George Lobsenz is editor of The Energy Daily, a sister publication of MANAGING POWER magazine. This is a reprint of a June 8 story.