According to the industry-backed Electric Power Research Institute (EPRI) the cost of upgrading the entire electric infrastructure in the United States will top $165 billion over the next 20 years.  Regional projects are carrying big price tags as well.

Xcel Energy’s SmartGridCity project in Boulder, Colorado is costing $100 million.  As the costs add up consumer advocate groups in Colorado, Pennsylvania, and California are beginning to question how the smart grid will be paid for.

“This is all uncharted territory,” said Bill Levis, director of Colorado’s Office of Consumer Counsel in an interview with the Denver Post.  “The costs have to be properly accounted for.”

Levis, along with the city of Boulder and consumer representatives, convinced the state’s Public Utilities Commission (PUC) to force Xcel to file for smart grid expenses totaling $42 million separately from rate increases.

“How much will it cost?” asks Jonathan Koehn, sustainability coordinator for the city of Boulder.  “What are the benefits?  We need a transparent forum to discuss these questions.”  Koehn added that the commission has a certificate-of-need process that determines whether a project is needed and if it is worth it.

Xcel Energy appealed the commission’s decision on grounds that the smart grid installation is merely an infrastructure upgrade and that supporting software and technology doesn’t require a special review.  The appeal was rejected on February 3.

“You don’t have only improvements of a distribution system discussed on ‘Good Morning America’ as this was,” said Ronald Binz, PUC chairman, adding that the Xcel project “deserves and requires” a certificate of need.

Despite the bickering over finances, SmartGridCity has won wide acclaim.  “Xcel has done a great job of implementing the system,” said Koehn.  “We still have to figure out how to use it.”

Elsewhere in the United States utilities are facing “stiff pushback” according to Charles Acquard, executive director of the National Association of State Utility Consumer Advocates.  “We feel we are moving too fast,” said Acquard.  “Smart grid is the brand new, shiny toy of the utility industry.”

Pacific Gas & Electric (PG&E) has already installed 4.6 million smart meters in California – at a cost of $2.2 billion.  The meters automatically report usage information back to PG&E every hour and can signals to smart appliances in consumers’ homes.  Paul Moreno, a spokesman for the utility, says that smart meters are essential for management of peak load and the integration of renewable energy.

“The cornerstone of smart grid is this house where your meter talks to your appliances,” said Mindy Spatt, spokeswoman for The Utility Reform Network (TURN) in California.  “My toaster is never going to talk to anyone.” 

Spatt believes energy efficiency and management can be accomplished without expensive smart meters.  “People can see the costs, not the benefits,” she said.

Residents of Fresno and Bakersfield have launched protests once their bills jumped after smart meters were installed.  California’s Public Utilities Commission is going to launch an inquiry into the accuracy of the meters.

PG&E maintains that the higher bills were the result of rate hikes and an unusually warm summer last year.  Moreno said the utility welcomes the inquiry.

Allegheny Power had planned to fund its $482 million smart grid project with a $5.32 monthly surcharge – which would rise to $15.77 a month in 2013.  “They are loading all the costs onto the surcharge, and it isn’t clear that every customer is going to benefit,” said Sonny Popowsky, Pennsylvania’s consumer advocate.

Doug Colafella, spokesman for Allegheny Power, said the utility launched the project in order to comply with state regulations that mandate energy efficiency.  The mandates didn’t determine how increased energy efficiency would be paid for.

“We need the whole structure because without it, a smart meter isn’t that smart,” he said.  “So, we’ll have to see if smart grid is a revolution or a revolt.”

Electric Power Research Institute
3420 Hillview Avenue
Palo Alto, California 94304
http://my.epri.com

Xcel Energy
414 Nicollet Mall
Minneapolis, MN 55401-1993
http://www.xcelenergy.com

Pacific Gas & Electric
PO Box 56
Avila Beach, CA 93424-0056
http://www.pge.com

Allegheny Energy, Inc.
800 Cabin Hill Drive
Greensburg, PA 15601
http://www.alleghenyenergy.com

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