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Colorado Springs Utilities: getting it done

We've hammered utilities upon occasion in this space, lately turning to regulators and wayward ratepayers. So it's only fair to turn today to under-appreciated successes. Plenty of folks are getting grid modernization right. Or, more intriguingly, using a combination of technology and customer participation to solve difficult, real-world challenges under trying economic circumstances. 

In that vein, let's look at one example, Colorado Springs Utilities (CSU).  It's a municipally owned utility at the foot of soaring Pikes Peak with markedly lower rates than nearby investor-owned utilities. Yet CSU, upon occasion, faces a hue and cry from ideologues calling for privatization. History? CSU is a municipal utility because price gouging by private interests early in the 20th century led to municipalization. Level-headed individuals, in the majority, recognize that if "government" can do the job better than private industry, stay out of the way. CSU is a model of efficiency and dedicated employees.

In the spirit of full disclosure, this column is being written off the top of my head, as an overnight snowstorm on the high plains today (Friday, Feb. 3) separates me from my notes. But I'd be surprised if I don't have the story correct. Let me also thank individuals from CSU who've given me their time to understand what they do, including Dawn Roth, general manager, ITS, Monica Whiting, general manager, customer revenue and services, and Angie Thoma, smart grid program manager. 

CSU delivers electricity, natural gas, water and wastewater services to a small- to mid-sized city. The utility serves about 210,000 electric meters, about 190,000 gas meters and something like 135,000 water meters. It has installed automated meter reading and it has had direct load control programs with some customers for decades. It operates its own power plants, both coal and natural gas, and in the relatively recent past has upgraded those plants to cut emissions, a major expense that it undertook by community consensus. 

CSU historically has earned some of the very highest customer satisfaction ratings among its peers. I spent the better part of a decade as a local citizen and customer (in the 1990s) and once interviewed CSU's top executive during one of those periodic spasms of ideology that called for divestiture, which was swiftly batted down by a sober populace.  

Enter the recession. Due to population growth and the need to modernize, CSU faced rate increases, politically unpopular with an elected city council that serves as the utility's board. And difficult, to be sure, for the working people of the city and the major military bases there. CSU decided on a program to meet this challenge. It would cut 10 percent of its workforce by attrition over a number of years (memory fails me on the span of years here), and it would freeze salaries. It would explore every avenue for deferring capital investment on constrained circuits, though overall it has sufficient supply to meet load for the foreseeable future (10 to 15 years).

Something had to give. To the employees' chagrin, but with their support, CSU's outstanding service levels were also deemed to be erodible to save money and prevent a rate increase. Automation could only do so much. Attention to every single customer's concerns, however, would be delayed somewhat, based on available staff and the severity of the problem.

The capital deferment program initially has focused, in part, on the city's so-called Appaloosa circuit, where load growth is "vertical" not "horizontal." That is, this circuit serves an older part of town that isn't expanding geographically due to new development, but in a familiar pattern to utilities is adding load as air conditioners and all manner of consumer electronics are added in each home. (Electric vehicles do not yet impact the system, but CSU is proactively addressing those potential impacts, too.) 

The challenge is to reduce peak load on the Appaloosa circuit to maintain adequate service in a cost-effective manner until 2014, when CSU will move ahead with capital improvements. Again, according to my memory, CSU's budget calculus allows it to spend about $105,000 annually in each of 2011, 2012 and 2013 to postpone about $2.4 million in upgrades, much of it in transformer costs.

How to do it? Engage your customers. CSU has offered some residents on the Appaloosa circuit who've expressed interest in a voluntary program a two-way smart meter and dynamic rates. Others have been offered incentives ($25 up front and $25 a month for June-August) to join a direct load control program with no override capability. Recruitment initially was slow, so CSU has added an outside marketing team to do outreach, but the preliminary results were something like double the drop in peak use by participants over the industry average. Further, participants in traditional direct load control programs in CSU's territory have exhibited a measly 5 percent override rate, enabling CSU to consider offering its program with no incentives.

The utility found that its first vendor for wireless data backhaul from the load cycling network wasn't up to the job and replaced it. Going forward, the early data from the Appaloosa experiment will provide the means to determine whether a similar program can be tailored to each of eight other priority circuits where deferring capital investment for, say, three years would further delay a rate increase. 

In short, CSU is using every trick in the book to do more with less, including customer outreach, a frugal budget approach, a technology piece and a little elbow grease and grit. Its customers "get it." They are hardly starry-eyed environmentalists, but they understand it's their utility, their dollars, their environment. This is a community with stunning natural endowments at the foot of one of this country's most iconic mountains, a major military presence (Army and Air Force bases), an Olympic training community, and a record of voting Republican despite a substantial swath of moderate and liberal voters. In short, conservative-leaning Colorado Springs is a slice of America. 

Make that a slice that still gets the job done, despite the difficulties. I think it's a pretty good story and one that deserves attention. 

Phil Carson
Intelligent Utility Daily











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