What Do Customers Expect from the Smart Grid?

To find out what ordinary electricity customers know about and expect from the smart grid—broadly defined as a modernized electricity network integrated with digital communication technologies—I interviewed a variety of residential customers and one large commercial customer in Boulder, Colo., the site of Xcel Energy’s SmartGridCity (SGC) project. (For the views of Boulder city officials and high-profile beta testers of the project’s various technologies, see these stories in the New York Times from Oct. 20 and 21.) The residential customers ranged from 30-something to 60-something, from condo owners to owners of  midsize and large single-family houses, and their monthly electricity bills ranged from an average low of $25 to a seasonal high of around $850. (Full disclosure: I am a former Boulder resident, and most of the interviewees are people I knew while living there.)

I spoke to these individuals in late October, just as Xcel was starting to qualify “a limited number of households” for a pilot project to involve digital meters and energy usage monitoring (see sidebar). When asked, “How much would you say you know about Xcel Energy’s SmartGridCity project?” the answers varied from “almost zero” to “quite a lot,” though those who knew the most were in some way involved in the energy industry.

Although the pilot project only involves residential customers, I also wanted to know what one of the largest energy users in the city thought of SmartGridCity. I asked a representative the University of Colorado at Boulder’s (CU-Boulder’s) cogeneration plant how he expects the SGC project to affect the campus.

If Xcel uses the project for good substation control, that will enhance reliability for the university’s electricity supply in the long run, he said. The university already has good reliability, thanks to three main feeders coming into the campus. (The on-campus power plant is only run when it’s economical, or when there’s an emergency.) The university currently has a standard public utility commission rate for electricity from Xcel, but the spokesman said he did anticipate cost implications in the future if the utility went to time-of-use rates. As for information about and control over energy usage, CU-Boulder, like most large campuses, is already using a campuswide automatic meter reading system and meters all buildings individually.

What Have You Done for Me Lately?

A September press release claimed Xcel had already “averted four potentially long-term outages by being forewarned about transformers that were ready to fail.” That’s great. Trouble is, consumers have short memories, and avoided outages don’t make news.

The day I talked with Neil Olien, a retired chemical engineer and former employee at the National Institute of Standards and Technology, he told me that there had been a couple of outages in the past two weeks at his house. In the background, I could hear his wife tell him that there’d been another outage that morning. He was “pretty sure” SGC technology would improve reliability.

On the other hand, homeowner Cindy Jones expects electric service to be less reliable because the SGC program “sounds like it’s a little bit experiential [sic].” Whether because the initiative requires customer action or because it’s still at the experimental stage, she said the idea that the program will change her ability to control energy usage “scares me to death.” Jones expects that someone will “dictate” to her how she can use electricity—or how much she can use—and that she’ll lose control.  As for cost, “I think the goal is to help [lower] bills,” she said, “but my experience is that anything called an improvement . . . will be more expensive. I’m a skeptic, because I know it will take a lot of work, and people, and time.”

Music teacher and bookstore employee Sharon Gillespie didn’t expect the SGC project to affect her in terms of reliability, cost, or control because she lives in a multi-unit building. Though she may not be eligible for the pilot program, she should eventually benefit at least from reliability improvements.

This May Hurt a Little

Most utility customers wouldn’t complain about improvements to the reliability of their electric service. But tell them that the enhanced reliability will require work on their part and/or bigger bills, and they may cry “ouch!”

Of the residential users I spoke with, only Caroline Quine, a graphic designer and parent of two teenagers, said she expects her electricity bills to get smaller as a result of the SGC project. Though she doesn’t expect any change in the reliability of her service, she does expect its cost to decrease as a result of increased efficiency. And she may be right. Her household, if provided with electricity-monitoring tools and TOU rates, might be able to lower its monthly bill.

Olien suspects that “It will probably cost more because [SGC] involves capital expenditure.” Following the same line of thought, Kim Knox, condo owner and a researcher at energy information services company E Source, said, “I expect that electricity costs may increase because the costs of the project (meters, technologies, installing new equipment, etc.) will be passed along to customers.” Nevertheless, she was excited to learn that her home would soon be equipped with a smart meter.

One sign that Olien and Knox will be proved right came in late October when I spoke with SGC media spokesman Tom Henley. Though Xcel and its seven partners have been footing the bill to date, Henley said that the utility was now asking the Colorado Public Utilities Commission (PUC) for cost-recovery approval, which would mean that at least some project costs would become part of the rate case.

On Nov. 3, the Denver Post reported that the utility was seeking $11 million of SGC project costs to be included in the rate case. “The city of Boulder, however, argued that because Xcel did not apply for a certificate of need from the utilities Commission, there is inadequate oversight of the project’s finances.”

On Dec. 4, the PUC approved a $128.3 million increase in electric rates, effective Jan. 1, 2010. (The utility had originally sought a $180 million increase.) The increase of about 6.5% for residential bills covers building a new coal-fired generating unit as well as SGC and other investments.

You Call This Fun?

As for the much-touted (by everyone from equipment vendors to utility execs to the president) ability to “control” one’s energy usage, that feature may be the most over-fluffed bit of marketing associated with smart grid rhetoric. On the surface, it sounds good—most of us like to know that we have “control” over the myriad aspects of our lives. But what’s not explained is that gaining control will require work—likely going online regularly (maybe even daily) to monitor one’s home energy usage and adjust thermostat setpoints or reschedule the operation of washing machines and dishwashers (given that mass deployment of programmable ones are years away). At the very least, in order to have any hope of lowering a power bill, folks with some sort of energy usage-monitoring equipment will have to stop and think before making decisions about discretionary energy usage.

Regarding her expectations for being able to better control her energy usage, Knox, who is well-informed about the promised merits of smart grid technologies, said, “I expect that once smart meters and in-home energy displays are installed, Xcel will eventually be able to offer customers various pricing options such as time-of-use or critical peak pricing. These technologies will provide customers with more information about when they’re using energy and how much it costs at certain times of the day. With this knowledge, customers will be able to decide if/how to manage their energy use in order to reduce their utility bills.” However, as we chatted, she admitted that, “Unless they make it really easy” she might not take the time to tweak her settings.

The irony is that, although Boulderites are on average highly educated and technically savvy, they also place a high premium on fun—especially outdoor athletic varieties of fun. Faced with the choice of spending even five minutes at a computer or other monitor evaluating energy usage and modifying settings and schedules or spending that extra five minutes on a run, hike, or bike ride, I’m betting that Knox won’t be the only one willing to choose the outdoors in exchange for an extra nickel or two on the day’s electricity bill.

—Gail Reitenbach, PhD is POWER’s managing editor.