SmartGridCity Too Costly To Duplicate

Xcel To Ask Customers To Pay High Cost Of Pilot Program

Two years after it broke ground, Xcel Energy isn't as enamored with the SmartGridCity project, as it once was.

In paperwork filed with the Public Utilities Commission, Xcel representatives said the project came in at nearly three times the initial projected cost of $15 million to $44.8 million.

"The company had to install far more underground fiber than initially projected, substantially increasing the cost associated with the fiber installation," wrote Daniel J. James, manager of pricing and planning for Xcel Energy Services Inc.

"The company does not presently have any plans to duplicate SmartGridCity elsewhere in its service territory: to do so would be premature until the value propositions can be tested. However, the company has already learned a tremendous amount of information from the project that it can utilize elsewhere on its system through more limited deployments of equipment. Moreover, the company is utilizing SmartGridCity for other pilot projects specifically, a pricing pilot, the In-Home Smart Device Pilot, and the online account management portal project."

Xcel broke ground on the project in April, 2008.

SmartGridCity debuted in September, 2009 with the goal of giving customers more information on electricity useage.

"This is not really a test of smart grids," said former City Councilman Steve Pomerance. "The meters (they used) are outmoded. They're failing all over the place. I have one friend whose so called "smart meters" -- which aren't smart -- failed five times."

Pomerance said the pilot program with 23,000 customers should have been tried with 500 to 1,000 customers.

"As a pilot program, this was way, way too big," Pomerance said. "It was Xcel's failures, not the idea's failures. Quite to the contrary, this is where things are going to have to head if we're going to shift out of fossil fuels into renewables."

On Monday, Xcel will begin a four-day hearing at the PUC, seeking to keep a previously approved rate increase to cover the rising costs of SmartGridCity.

Pomerance believes Xcel shareholders should bear the costs.

"They didn't really have the thing thought through well from a cost-benefit perspective," Pomerance said.

While an Xcel spokesman refused to speak with TheDenverChannel about the project, James wrote that spiraling costs weren't totally anticipated.

"Before proceeding with the SmartGridCity project, the company did not perform any traditional cost-benefit types of analyzes(sic)," James wrote.

Gov. Ritter approves of Xcel's attempt to recoup its costs.

"While we acknowledge the challenges and costs associated with the project, the development of the Smart Grid is a critical market transformation for the future of utilities. We need a 21st century grid for a 21st century society; these investments will build energy security by reducing peak demand, balancing conventional and renewable energy, and save consumers money as their homes, appliances and devices use electricity in a vastly more efficient and responsive manner," wrote Todd Hartman, media relations manager for the Governor's Energy Office. "It’s important to understand that the rate increase associated with Smart Grid City is a very small portion of a broader rate request, the bulk of which is tied to costs associated with the Comanche power plant in Pueblo."

Boulder city officials will not testify at the evidentiary hearing next week, citing difficulty in getting accurate data on SmartGrid from Xcel.

"So the city is going forward with its clean energy future. We're starting this fall to study what might be the best path forward," Patrick von Keyserling, spokesman for the city of Boulder, said. "How do we do clean energy with renewable energy sources? What are the best options for monitoring usage so the customer is making informed decisions?"

“Everyone in the business knows that the technology to do smart metering at an affordable price isn’t available. I believe that the rate payers shouldn’t have to pick up the cost of this experiment,” said Bill Schroeder, public affairs foorn IREA, Intermountain Rural Electric Association.