Wednesday, April 16, 2014
The staff of Maine’s Public Utilities Commission contends that Central Maine Power Co. has mismanaged its smart-meter program, costing customers millions of dollars rather than saving them money and failing to provide the expected energy savings and operational benefits.
CMP disagrees, saying the meters were installed on budget and have already begun saving money, with greater benefits coming in the years ahead.
The PUC will decide Thursday whether to audit the program – a step that would broaden the debate over smart meters beyond their alleged health effects into questions about whether the devices have lived up to their promised potential.
The commission’s deliberations could provide an early glimpse into how Mainers are taking to a nascent, fast-changing technology. So far, very few customers appear interested in the limited data offered by CMP’s smart meters, or in using electricity when rates are cheaper.
That’s not unusual, said Patty Durand, executive director of the Smart Grid Consumer Collaborative, a nonprofit advocacy group based in Atlanta.
“It’s a slow process,” she said. “Our research shows consumers want to know more, but it takes time for utilities to figure out what programs to create and how to market them.”
Digital meters are one link in what energy experts call a smart grid, an evolving system in which computers and automation help maintain and upgrade the reliability of the nation’s electrical network. The meters are fast replacing analog meters in the United States. More than 35 million had been installed by the first half of last year, and 65 million will be in place by 2016, according to the Edison Foundation.
CMP and state regulators began talking about smart meters six years ago, but the PUC didn’t approve the program until 2009, when a $96 million federal stimulus grant that paid half the cost became available. Today, 600,000 meters are operating in an 11,000-square-mile wireless network. The network lets CMP calculate bills without sending workers to read meters, for instance, and it lets customers know how much electricity they’re using at various times.
When the meters were first installed, CMP estimated that the net savings to ratepayers would total $25 million over the 20-year life of the equipment. But the PUC staff says that won’t happen. Rather than saving money, the program will actually cost customers about $80 million over the period, the staff says, and CMP shouldn’t be able to recover that cost in rates.
CMP strongly disagrees. In a rebuttal filed last week with the PUC, it notes that a total of 13 audits of the program will be done by year’s end, internally and by the federal government, and no audit has revealed big issues with cost, management or the capabilities of the system.
“We absolutely delivered the project on cost and on schedule,” said John Carroll, a CMP spokesman.
Carroll said the PUC staff is using a one-year revenue number to make a faulty analysis. He said CMP will update its 20-year cost-benefit projections soon, as part of a pending rate plan, and the program will show a net savings.
Some of the savings come from operating efficiencies that aren’t easy to see, he said. One example is estimated bills, a practice that customers don’t like. CMP had to send 95,441 estimated bills in 2010. Last year, it issued 5,833.
The disputed gap between costs and savings has the Maine Public Advocate’s Office siding with the PUC staff in seeking a formal audit. The office long has expressed doubt about how smart meters would save money.
“Our concerns have been realized,” wrote Eric Bryant and Agnes Gormley, two senior lawyers in the office. “Even though the costs of the audit will add to the weight of customer bills, the company’s failure to deliver as promised demands this action.”
If the PUC decides to audit the program, it will have to agree on which math to use to get the most accurate picture of costs and savings nearly 20 years from now.
The challenge of peering far into the future extends to guessing how and when people will use technology, likely in ways that have not yet been imagined.
One charge by the PUC staff is that the system CMP installed lacks the capacity to deliver what are known as supply-side benefits – ways, for instance, that customers can use technology to save money. To determine whether that’s true, the PUC first may have to assess the level of interest that people have now in participating in energy management programs.
For example, late last year, CMP and the PUC publicized a new “time-of-use” rate for home and small-business customers who get their electricity from the state’s standard offer. The idea is to reward people who can wait to run high-wattage appliances, such as washing machines and water heaters, when demand is low. That reduces the need for firing up power plants that add cost and air pollution.
The plan offered cheaper rates for electricity used during off-peak hours, after 8 p.m. and before 7 a.m. It also contained a penalty – above average rates for using power during the day.
Only 120 customers signed up for the program.
One reason may be that CMP and the PUC have done very little to make people aware of the option. Another factor, says Laney Brown, director of smart-grid planning and programs for CMP’s parent company, Iberdrola USA, is that many customers now get their electricity from competitive suppliers, not the standard offer. CMP plans to work with those companies to encourage them to offer time-of-use rates.
“I think people like to know that they have choices, whether they take them or not,” she said. Bryant, the lawyer in the Public Advocate’s Office, has a different take on the lack of participation. Most electricity customers, he said, just want stable and predictable rates.
“For decades,” he said, “most customers have been happy to flip a switch and have power, and write a check each month. I’m not sure the bulk of customers are ready to go beyond that.”
Another promised benefit of smart meters is that they would let customers monitor their electricity use in real time, and hopefully spot trends that would help them lower use. Customers who pay their bills online now have that option, through a Web portal called Energy Manager. Customers can track their energy use over various time periods, see the cost and compare it to an average. So far, 6,000 people have signed up, 1 percent of CMP’s customer base.
That’s not a sign of failure, in CMP’s view.
“You can’t really hold us responsible if people aren’t using the technology,” Carroll said. “The system is there. They system is working.”
CMP’s main task was to set up the platform, Carroll said. In the example of time-of-use rates, he said, the meters make it possible, but it’s also up to competitive energy providers to offer and market rate alternatives that can save customers money.
Durand, the smart-grid advocate, said the responsibility falls to both utilities and competitive energy providers.
They must break the market in segments. They could, for example, promote time-of-use rates to customers with environmental leanings, by highlighting that running fewer power plants reduces carbon emissions.
“Sometimes, consumers don’t even know these programs exist,” she said. It’s also possible that some of the functions of smart meters will be leapfrogged by tools and practices that are just coming into wider use. Manufacturers are starting to roll out equipment and mobile applications that let consumers operate their air conditioners and washing machines from their smart-phones.
But Durand said it will take many years for smart appliances to become common in most homes. Even then, the time and use data collected by the meters will help service providers show consumers which energy plans can save them money, just as calling and texting habits help people decide which cellphone plans to pick today.
“I don’t view it as leapfrogging,” she said. “I view it as complementary.”
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