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eMeter's Chris King: regulation, consumers, Zigbee

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We caught up with smart grid thought leader, Chris King, chief regulatory officer for eMeter, at DistribuTECH and bring you a two-part column on his views on hot topics.
Intelligent Utility: Looking back to 2010, what stands out in your mind?

King: At the top of the list, I'd say the accelerated rollout of meters, particularly in California, Texas and Delaware. Others, like Nevada, are just getting started. Utilities have been scrambling to deploy meters on schedule. They haven't had the time yet to start implementing the customer-facing functionality. We've seen some frustration around that issue. Customers see their new smart meter and don't understand the benefits.

IU: Some say meter installation and customer benefits should be closely coordinated. Others say it's acceptable to install first, deliver functionality later. Your view?

King: In a perfect world, you'd get three major benefits at once. One benefit would be dynamic pricing options. The second is energy usage information, not just on a Web site but sent to you. Third, you'd also be able to connect to a smart thermostat and smart appliances. This way, your preset thermostat and appliances could respond to a price signal [sent through a smart meter].

IU: Where are we in terms of those three factors, among utilities that have deployed meters?

King: In 2010, we had a number of small pilots. In 2011, we're going to see major expansion of those pilots.

IU: What will be the impact of pushback over privacy or health issues relating to meters?

King: Another major headline for 2010 was the switch to a focus on the consumer, in part due to the meter pushback experienced by Pacific Gas & Electric (PG&E). Now every utility has a heightened sensitivity to educating consumers. Issues of privacy and security need to be addressed.

Will that stop deployments? There's relatively little indication that the ongoing rollouts will slow significantly. PG&E, for example, is 80 percent done. The California Public Utility Commission has said it won't take up the moratorium issue again.

IU: Do you see a continuing impact from last year's high profile regulatory cases such as the Baltimore Gas & Electric (BG&E) case before the Maryland Public Service Commission and the Xcel SmartGridCity case before the Colorado Public Utility Commission?

King: Absolutely. These two regulatory cases highlighted issues that, frankly, should have been addressed by those two utilities upfront. It's good these issues came out so other utilities will become aware of the issues and deal with them. In BG&E's case, one issue was mandatory time-of-use pricing, which I've opposed. It's not good public policy. The other issue, to put it diplomatically: BG&E over-reached on cost recovery. They asked for more than they typically would have gotten with a normal project. The Maryland commission said, essentially, we're not giving you preferential treatment. The ultimate decision said BG&E could recover costs, but subject to standard reviews.

I'd put Xcel in a similar category. Again, there was so much excitement about the smart grid, they may have thought they had a blank check to do their pilot. But if you look at any other project that utilities undertake, you'll see a much more measured approach.

In the end, both commissions said that smart grid and smart meters are good things, but we're going to hold your feet to the fire. It's got to be cost effective, reasonable and the risks must be shared between ratepayers and shareholders.

IU: Your PowerCentsDC pilot appeared to be a good model for collaboration among stakeholders. Was that model ground-breaking?

King: It was ground-breaking in two senses. One was collaboration. The project was run by a board composed of the utility, the consumer advocate and a local labor union. I haven't seen that formally adopted elsewhere. But I do see utilities going to their stakeholders and soliciting input on upcoming pilots.

The other aspect is that we took the consumer's perspective. We didn't say we're going to test a dynamic pricing plan to figure out the price elasticity of demand. We said we're going to give consumers a package of information, pricing, automatic control of their thermostat, so use these tools in a way that makes the most sense for you.

IU: It strikes me that the model of the investor-owned utility is somewhat at odds with the level of transparency needed for a truly interactive, cooperative relationship between the utility and the consumer. Your view?

King: More transparency doesn't really come to mind, but two things do. One is utilities saying they're all about consumers. Yet utilities don't have that expertise. They provide a great service but they don't know how to produce consumer-oriented features, segment consumers, respond to changes in consumer preferences. But the first step is recognition of the need to focus on consumers.

Looking forward, utilities will be forced to get better at this, because consumers will have choices, options from Google and Microsoft, for example, or simply because consumers will expect more information, options and flexibility from their utility.

The other issue is incentives around rates. We have 12 states in which utilities make the same rate of return regardless of how much power they sell, which is good for conservation. They promote energy efficiency and still maintain their profits. For the other 38 states this remains an issue, so they're looking at how to deal with that inherent contradiction in goals.

Please tune in tomorrow for the second part of this two-part interview.

Phil Carson
Intelligent Utility Daily

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