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Utility executives faced with the emerging requirements of defining and instantiating the new smart grid infrastructure are finding the technologies ready but the regulatory environment less so. Buoyed by the news that the Federal limit on stimulus funding for smart grid projects has been raised from $20 million to $200 million, it remains a challenge to garner the support of the regulatory commissions, governors and other public agencies necessary to propose a properly conformed project for stimulus funding. Commissions like New Jersey and West Virginia have been lukewarm to smart grid investment, particularly investment of any size greater than a conservative pilot program. Even so, both utility executives and technology vendors view the current market with rising energy prices, increased environmental awareness, and the economic downturn as the “perfect storm” encouraging smart grid investment.

The evaluation of smart grid investments is difficult, at best, often requiring inclusion of “societal benefits” to drive a measurable ROI, particularly when the analysis is restricted to a single utility. Many of the benefits of smart grid are attributable at the Federal or regional level, beyond the utility making the investment. National security, cyber security, and the ability to optimize and manage the grid and required reserve margins at a national level are, for example, benefits of individual utility smart grid investment; however, these benefits are neither quantifiable at the local level nor are they considered appropriate for rate recovery. Instead utility benefits are limited to cost savings due to automated meter reading, remote cut-off and hook-up, increased distribution efficiency, etc. While all conference participants are aware of and articulate about the societal benefits, including the prospect of improving the lives of the general public and, particularly, our children and children's children, these benefits are hard to quantify and justify at a local level without an equally far reaching appreciation of the potential of smart grid investment on the part of the state regulator.

So went the discussion at the two-day, invitation-only Executive Summit held in conjunction with CS Week activities taking place at the end of May, 2009 in the shadow of Capitol Hill in National Harbor, Maryland. The intent of the Summit was to provide a forum for utility executives to share ideas and strategies for addressing the key challenges they face. This year's forum was graciously sponsored by EDS, an HP company, Elster, IBM, Itron, Oracle Utilities, SAP and Vertex.

New Approaches to Customer Service

Day one of the Summit was devoted to an examination of the latest approaches to customer service. Presentations included the general discussion of AMI MDM strategies and the challenge of integration with the utilities CIS application. CIS strategy becomes a key issue for utilities deploying smart grid strategies and the group debated at length which comes first, the CIS or the MDM strategy. With the volume of data generated by an advanced meter infrastructure, the utility has to be prepared for data storage and data conversion into decision ready intelligence. Utilities with relatively recent CIS upgrades will be challenged, along with their CIS vendor, to assure that their CIS can handle the requirements of decision making enabled by new flows of information to and from the customer and their distribution/transmission infrastructure. Utilities with older legacy systems, the majority of the utilities in attendance, must carefully craft and understand the requirements of their MDM strategy as they prepare to evaluate new CIS upgrades.

In the context of meeting customer requirements, the attendees discussed the potential for energy efficiency to achieve fast and significant energy savings. In addition to managing load, energy efficiency can lower energy bills, deliver environmental benefits and foster economic development. Energy efficiency must pass the rigors of a business case and have regulatory support to be viable.

A provocative view of the future energy internet was provided by Roger Duncan, General Manager of Austin Energy, the municipal utility for Austin, Texas. Roger's presentation was entitled “The New Prosumer.” Prosumer is derived from prosumerism, a name coined by Alvin and Heidi Toffler in their futuristic tome, Revolutionary Wealthy. The new energy prosumer is an energy market participant who both produces and consumes energy, describing the energy customer who produces wind, solar or battery (PHEV) power for sale to the grid and also consumes energy provided on the grid. Roger described a future world of the distributed utility where prosumers used homes and transportation to both take from and provide energy to the grid. He concluded with a description of the Pecan Street Project, a project to design the electrical energy system of the future for the City of Austin Texas. With the support and engagement of 10 corporate partners, the Austin Energy is offering its electric grid as a real world proving ground for tomorrow's clean energy technology to create an infrastructure to power the economy and preserve the environment of Austin, Texas.

Driving a New Vision for Electric Utilities

Day two continued the focus on the customer with a focus on credit and collections success–a growing problem for all utilities in the current economic environment. Sharon Grove of Nicor Gas shared her extensive experience in streamlining and improving revenue conversion cycles via the meter-to-cash process. Using a combination of aggressive collection policies, bill redesign, and predictive dialers with instant payment option, Nicor has been able to stabilize uncollectible expense as a percent of gas operating revenues at 2 percent, lowest among benchmarked comparable companies.

The AMI MDM Shootout, moderated by Mark Wyatt, VP Smart Energy Systems, Duke Energy focused on the current state of the AMI MDM market. Among the key issues identified by the panel was uncertainty about how much technology you really need to get the benefits of the smart grid, the difficulty of identifying the customer benefits, and data security, particularly protecting information available from and about the home. While generally recognizing the difficulty of justifying smart grid investment purely on customer benefits, there was also general agreement that societal benefits of smart grid investment made a persuasive case for utilities seeking regulatory support for proceeding to develop smart grid capability. Consumer response to increased control over their pattern of usage given the small savings in energy cost achieved was a concern of the audience. Ivo Steklac of Elster summarized the results of demonstration projects noting that over 50 percent of participants in post audits wanted to keep their equipment and continue managing their electric usage and that the majority of these “keepers” were in the lower income category of demonstration participants. The panel concluded that the industry was in a transitional period, but the availability of stimulus dollars to support investment provided an appropriate urgency to get on with projects that could qualify for such investment support. Before beginning a project you need a solid architecture in place to support smart grid investment, a clear direction and understanding of how and what decisions will be made from new data available, and an overall strategy for what meter data management you will and won't do.

Joseph Rigby, President and Chairman of the Board of Pepco Holdings, Inc. host sponsor of this year's CS Week gave a presentation on How Customer Expectations are Driving a New Vision for Electric Utilities. Joe's presentation capped off this year's focus on the customer by describing the changes facing the utility industry's transformation into the energy internet and PHI's response to transform their electric system and the way they communicate with customers. In a nutshell the strategy calls for transforming PHI into a trusted partner with their customers. This requires more than simply providing safe and reliable power. PHI must be responsive to customers, supplement traditional service with information and assistance to identify solutions to customer issues, and provide easy access to useful information that will save customers money. PHI is one of the first utilities to instantiate Twitter as a basis for two way communication with customers. Both YouTube and Facebook are slated for addition to PHI's communication program within the year. Social networking has proved a benefit for PHI and has become an essential feature of its communication program. Community feedback has been largely positive. Joe's presentation of PHI's strategy for becoming a trusted partner with PHI customers made a persuasive case for how utilities must be prepared to operate in the smart grid enabled energy internet.

Executives at the CS Week Executive Summit explored timely issues of the day–CIS strategy, Energy Efficiency, Credit and Collections, and Smart Grid Investment–and explored the customer environments of the future–the energy prosumer and becoming a trusted partner to tomorrow's consumers, proving, once again, the extraordinary value of peer review of issues and sharing of ideas.

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