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Smart Grid City Stumbles, Who Pays?

Yesterday I proposed that "smart grid is local," just like politics. And I suggested that, just like politics, smart grid proponents need to define themselves or their opponents will do it for them.

This maxim is nowhere more apparent this week than in my backyard, where the greatly heralded SmartGridCity in Boulder, Colo., has tripled in cost and unleashed widespread condemnation.

A $15 million projected cost has mushroomed to nearly $45 million and who pays the inflated cost is at issue, according to The Denver Post this week. That's pocket change to Xcel and to one million ratepayers over, say, three years. Obviously, that math won't fly with citizens or public utility commissions, nor should it.

This issue gets legs based on principle—who should pay, and why?—as well as the yawning chasm between hype and reality. 

David Eves, CEO of Xcel Energy's Public Service Co. of Colorado, delivered the bad news as softly as possible this week when he acknowledged Monday "we would not do that again over the whole service area." Perhaps Eves meant that any future pilot program would be significantly smaller than the 23,000 homes in SmartGridCity's coverage area.

Of course, if you contrast that remark with the project's heady days two years ago, you get a sense of that chasm between hype and reality. In November 2008, project leader Ray Gogel, then an Xcel vice president and executive in charge, said:

"We like to think of smart grid as bringing the world of Thomas Edison together with the world of Bill Gates. We're doing something that the whole world is looking at right now."

The latter statement rings true today, but not for good reasons; the former statement, perhaps not so much.  

Personally, I have no stake in this particular situation, though, like many, I have a compelling interest in the eventual outcome. I get the intent (of Xcel, Boulder, participating vendors). I get the discontent (of Boulder residents, Xcel ratepayers, naysayers). For me, the fits and starts we're now experiencing across the country are simply part of an arduous journey we've undertaken.

Yet I'm also a taxpayer and wage-earner and cognizant of the toxic effect of hard times on fellow taxpayers and wage-earners. Experiments such as SmartGridCity are appropriate, as are criticisms when they underperform or costs run over.

A look at media coverage of SmartGridCity this week offers an opportunity to juxtapose the vision and the visceral reaction to expensive missteps. Proponents of smarter grids must be ready to argue their case and counter critics emboldened by high costs and occasional failures.

Next week, the game gets serious as Xcel appears before the Colorado Public Utilities Commission (CPUC) to argue why its customers should pay for a radical cost overrun due, it said, to laying fiber optic cable to 23,000 homes and software expenses, the company said.

The city of Boulder, which at first backed Xcel's request, has withdrawn its support. The city council said in a CPUC filing that it lacked consensus on "the value of SmartGridCity in its present state or the prudence of this investment." The office of outgoing Gov. Bill Ritter supports cost recovery through ratepayers' rates. Colorado's Office of Consumer Counsel holds that Xcel is entitled to recover $27.9 million, a project cost identified in 2009.

The Denver Post's article this week on cost overruns generated commentary, of course, reflecting several themes running through what passes for public discourse these days, including the good, the bad and the ugly. The "good" will need to be encouraged, the "bad" (possibly) educated and the "ugly" totally ignored.

"Xcel I honor the courage it took to take a risk like that and be a leader. We can all (second guess) your decisions at this point, but having been involved in large endeavors like yours, I know the courage and principles it takes to claim new ground."

"Let the residents of Boulder pay for it! Their deal, they pay."

"Just another example that the new energy economy is a sham. It's a failed industry propped up by taxpayers."

"So Xcel decides to do an experiment, then wants us to pay for it?!!! Instead of mugging us, they should take it out of their executives' pay and perks. They can probably recoup $45 million in a matter of weeks."

Phil Carson
Intelligent Utility Daily



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