Smart grid technology is due to come online in the Rio Grande Valley in 2011.  Customers will begin paying for the installation this month.

American Electric Power (AEP), one of the largest utility companies in the United States, has plans to install some 230,000 smart meters in the Brownsville, Harlingen, and McAllen region in south Texas.  Smart meters are the first step towards a true smart grid that will transform how power is used within the country.  Reworking the power grid has been deemed a top goal of the Obama administration.

“The installation of the meters is being compared by some industry observers to moving from the horse and buggy to the automobile,” said Larry Jones, AEP spokesman.

The smart meters are expected to make the power system more reliable and will allow for increased usage of renewable power sources, according to Jones.  Smart meters will also help consumers save money on their bills and help the whole country conserve energy.

Smart meters are able to provide insight into energy consumption in real time.  Armed with this data, consumers can make informed decisions on the best way to use their appliances.  Small changes in behavior can add up to big savings over time and smart meters are able to point out these subtleties.

Most of the Rio Grande Valley will wait until 2011 before they have their smart meters installed.  Only about 9,000 residents living in Brownsville will have them installed in the spring, with more coming later in the year.

All residents will begin paying for the system this month.  The surcharge will be spread out over the next 10 years as approved by the Public Utility Commission of Texas (PUCT).  The Texas legislature determined the surcharges were necessary in 2005 as the best way for power providers to recoup the costs associated with smart meter installations.  PUCT, a state consumer protection agency, is working with every major utility in Texas to come up with a fair surcharge.

AEP’s deployment plan was approved by PUCT last month.  Other large Texas utilities had similar plans with similar surcharges approved by the commission in 2008.  According to AEP’s deployment plan, the average cost for a smart meter is $161.65 including installation and overhead.

The total cost of AEP’s smart meter project is $430 million including capital investment and expenses related to operations and maintenance.  The project will involve about 1 million customers in west and south Texas.  This works out to a surcharge of $300 for south Texas AEP customers – payable over 10 years.

According to Jones, the surcharge is the most equitable way for utilities to recover installation costs.  A potential increase in electricity rates could prove to be prohibitive for customers also paying for a meter upgrade.

According to PUCT spokesman Terry Hadley, the result is long-term savings for consumers once their providers are able to provide variable rates based upon the time of day.  Consumers will be able to save by limiting their usage during peak time periods.

“This is all part of a much larger program,” said Jones.  “And having those meters in place is a very necessary step.”  The bigger picture, of course, is the smart grid of the future which requires upgrading the “largest interconnected machine on Earth.”  George Arnold, the national coordinator for smart grid interoperability, made that reference before a U.S. House subcommittee last July.

American Electric Power
1 Riverside Plaza
Columbus, Ohio, USA 43215-2372
http://www.aep.com

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