Monday, August 10, 2009
Another World - Part 3 of 3
4:26 PM | 
Posted by
Billy Ray |
As we move toward another world with respect to electric power, we certainly want to take advantage of the things we have learned over the last few years as we prepared for this new adventure. During our years of experience at providing electric power, then cable television, then internet service, and finally telephone service, we figured out several things about our customers here in Glasgow. For example, we know that our customers like it best when we take care of their technology decisions, the training for using new technology, the implementation of new technology, and you also like it when we provide ongoing support for any troubles in using our various products and services. We know that very few of our customers actually understand what a kilowatt-hour is, and further, we understand that you really don’t want to know what one is.
All of these lessons learned lead us to believe that very few of our customers will be interested in us just simply implementing a TOU (time of use) electric rate schedule and then leaving it up to them to install programmable thermostats and other switches and controls that could be used to save money on a TOU rate. This experience is what gives us a head start on the other utilities, and equipment vendors, who are trying to roll out programmable devices and homeowner electric meter information sites in the hope that customers will use these devices to lower the peak demand on electric systems. They still assume it will work, we are cynical about that because of our experience with customers and the many new technologies we have implemented for them over the years.
We believe infotricity can become a reality and that the advent of infotricity will reduce the peak demand for electric power and allow fewer carbon dioxide belching generators to satisfy our need for energy. But we also are convinced that the utility will need to reach far into the home and provide much of the control of HVAC systems and major appliances for the benefits of infotricity to become a reality. That rattles some folks as they see this as an intrusion into energy use decisions that have always been their right. We certainly do not expect to reach in and control anything in your home without your permission. We believe there will always be the option to refuse to cooperate on these new load management controls, but it is also very likely that such refusal will result in much higher electric rates for those that wish to remain ruggedly independent. As stated previously in this series, the days of artificially low electric rates made possible by some users subsidizing the habits of less efficient users is coming to a screeching halt. It really does not require a crystal ball to predict that outcome.
So, coming around the bend are our plans to convince you to allow us, and/or our local contractors, to install a programmable thermostat for your electric heat pumps and air conditioners, and we will be trying to negotiate a deal with you that will allow us to slightly increase and decrease the temperature in your home in return for a credit on your bill. We will be trying to convince you to allow us to control when your electric water heater does its work. We may also be trying to convince you to allow our local vendors to install new refrigerators, dish washers, clothes dryers, etc., that will also respond to our control signals such that electric power demand can be shaped more efficiently. All of these things are coming, and the technology that allows all of this to happen will be possible because of the broadband network that we started building back in 1988. While all of these new technologies are complicated and amazing marvels of modern science, we know that the really tough part of this process will be getting the word out.
As a reader of this blog, you represent one of the roughly one thousand folks who read this information each month. Since there are at least seven thousand homes and businesses in Glasgow that we need communicate with about these matters, we need to find a better way to communicate with the rest of our customers who do not read this blog. We also have access to cable advertising, which we will also use to inform folks about this new world and the things we need to do to help them live happily in it, but we know from experience that many folks will swear they never heard about it on television either. We will use radio advertising, electronic signs around town, and direct messages contained in the monthly billing. Still, we know that many will not be reached this way either. We might try sky writing as it seemed to work for the Wicked Witch of the West in The Wizard of Oz, but I am still skeptical of it working here in Glasgow. If you have ideas on how we can do a better job of getting this information out, please let me know.
So, as we have said, another world is coming. It might arrive as soon as November of this year. So what can you be doing right now to prepare for it? Well, this whole new world is going to revolve around the use of electric power. If you have a natural gas water heater and gas heating, you should consider moving toward electric powered appliances if you want the opportunity to free yourself from the massive cost swings associated with natural gas. If your water heater fails within the next couple of months, consider a high efficiency electric water heater as it will work with infotricity. If you are considering the installation of a programmable thermostat, well, perhaps you should wait a few months on that because we might be doing that for you. Most of all, the best way to prepare for this new world is to make yourself available to listen to the things that are going to be available to you in the new world, and help us get your neighbor’s attention as well. We truly want to help every single resident of Glasgow understand what the new world is going to be like and we want everyone to understand what wonderful opportunities are coming our way.
All of these lessons learned lead us to believe that very few of our customers will be interested in us just simply implementing a TOU (time of use) electric rate schedule and then leaving it up to them to install programmable thermostats and other switches and controls that could be used to save money on a TOU rate. This experience is what gives us a head start on the other utilities, and equipment vendors, who are trying to roll out programmable devices and homeowner electric meter information sites in the hope that customers will use these devices to lower the peak demand on electric systems. They still assume it will work, we are cynical about that because of our experience with customers and the many new technologies we have implemented for them over the years.
We believe infotricity can become a reality and that the advent of infotricity will reduce the peak demand for electric power and allow fewer carbon dioxide belching generators to satisfy our need for energy. But we also are convinced that the utility will need to reach far into the home and provide much of the control of HVAC systems and major appliances for the benefits of infotricity to become a reality. That rattles some folks as they see this as an intrusion into energy use decisions that have always been their right. We certainly do not expect to reach in and control anything in your home without your permission. We believe there will always be the option to refuse to cooperate on these new load management controls, but it is also very likely that such refusal will result in much higher electric rates for those that wish to remain ruggedly independent. As stated previously in this series, the days of artificially low electric rates made possible by some users subsidizing the habits of less efficient users is coming to a screeching halt. It really does not require a crystal ball to predict that outcome.
So, coming around the bend are our plans to convince you to allow us, and/or our local contractors, to install a programmable thermostat for your electric heat pumps and air conditioners, and we will be trying to negotiate a deal with you that will allow us to slightly increase and decrease the temperature in your home in return for a credit on your bill. We will be trying to convince you to allow us to control when your electric water heater does its work. We may also be trying to convince you to allow our local vendors to install new refrigerators, dish washers, clothes dryers, etc., that will also respond to our control signals such that electric power demand can be shaped more efficiently. All of these things are coming, and the technology that allows all of this to happen will be possible because of the broadband network that we started building back in 1988. While all of these new technologies are complicated and amazing marvels of modern science, we know that the really tough part of this process will be getting the word out.
As a reader of this blog, you represent one of the roughly one thousand folks who read this information each month. Since there are at least seven thousand homes and businesses in Glasgow that we need communicate with about these matters, we need to find a better way to communicate with the rest of our customers who do not read this blog. We also have access to cable advertising, which we will also use to inform folks about this new world and the things we need to do to help them live happily in it, but we know from experience that many folks will swear they never heard about it on television either. We will use radio advertising, electronic signs around town, and direct messages contained in the monthly billing. Still, we know that many will not be reached this way either. We might try sky writing as it seemed to work for the Wicked Witch of the West in The Wizard of Oz, but I am still skeptical of it working here in Glasgow. If you have ideas on how we can do a better job of getting this information out, please let me know.
So, as we have said, another world is coming. It might arrive as soon as November of this year. So what can you be doing right now to prepare for it? Well, this whole new world is going to revolve around the use of electric power. If you have a natural gas water heater and gas heating, you should consider moving toward electric powered appliances if you want the opportunity to free yourself from the massive cost swings associated with natural gas. If your water heater fails within the next couple of months, consider a high efficiency electric water heater as it will work with infotricity. If you are considering the installation of a programmable thermostat, well, perhaps you should wait a few months on that because we might be doing that for you. Most of all, the best way to prepare for this new world is to make yourself available to listen to the things that are going to be available to you in the new world, and help us get your neighbor’s attention as well. We truly want to help every single resident of Glasgow understand what the new world is going to be like and we want everyone to understand what wonderful opportunities are coming our way.
Friday, August 7, 2009
Another World - Part 2 of 3
For a long time you have heard me talk about infotricity and time-of-use electric rates. These are really just tools which are evolving as useful ways to get us to the promised land of real cost-based electric rates. The newest buzz word relative to the implementation of new technology that will lead to widespread adoption of time-of-use electric rates is “smart grid” and we are applying for the funding to implement more of that technology in Glasgow.
Smart Grid and Stimulus Money are two terms that surely no one has been able to escape over the last several months. Those of you who are familiar with the activities of the EPB over the last twenty plus years will know that our broadband project was born with the objective of changing everything about how electric power is metered, sold, controlled, and purchased. While we have been calling that concept “infotricity” over the last couple of decades, the new catch phrase applied to the idea of using broadband to change the way electric power operates is “smart grid.” It really is not a new idea at all.
A year ago TVA approached us with the idea of using Glasgow as a test site for our long-held ideas about using broadband to control loads like air conditioners and water heaters. We gladly accepted their offer to purchase the devices that need to be tested for performance and reliability. However, before that project could ever get moving, along came this economic mess and the passage of the legislation that earmarked tons of federal monies for infrastructure projects, including smart grid projects. Both TVA and TVPPA (the trade association of the TVA power distributors) became totally consumed with the prospect of getting $400 million worth of this money by creating a regional consortium of TVA distributors willing to commit to installing smart grid technology and demonstrating how the technology might be used to mitigate the need for additional generation facilities. As you might expect, Glasgow is right in the middle of this whole discussion.
While we agreed to work with TVA and TVPPA and EPRI and Oak Ridge National Laboratories on this consortium, we also monitored the application process to see if we also wanted to apply for some of the funding separately from the consortium, assuming that we could qualify for some of the monies directed toward smaller projects and smaller municipalities. The EPB team did a great job getting up to speed on the rules of the game (which are more complicated and voluminous than anyone dreamed possible) and we developed a game plan for our possible projects along with the consortium plan.
The prospect for us attracting stimulus funds for our smart grid ideas seems to be a pretty good possibility. However, after the team analyzed the rules, it became clear that we could not hedge our bets by applying with the consortium and then again on our own. So, we are putting all of our eggs and effort into the TVPPA-EPRI-TVA-ORNL basket. We have submitted our preliminary request for funding that would allow us to install the muNet meters at each of our 7,400 homes and businesses. We asked for money that we can use to pay local contractors to install IP-based water heater switches and thermostats in every home and business in Glasgow with electric water heating or HVAC. We asked for money to install IP-based switches and sensors all over our electric network to allow for fault location and automatic isolation and redirection of power flow. In summary, we asked for everything we could think of and then some more. The total estimated cost for the Glasgow portion of the TVPPA application comes to over $14 million. Will this actually happen? We don’t know. If it does happen how much might Glasgow EPB be expected to furnish? That is also unclear, but it might be as much as 30% of the cost! Are we willing to risk spending $4 million to get $14 million worth of technology for the people of Glasgow? That would be a simple question if the $4 million were available and if the ultimate TVA rate design were known. If those variables were filled in we could do a simple present worth analysis of the future savings made possible by the technology. However, that is not the case, and it will not be the case for any of the cities contemplating this matter.
So, we have applied for the funding and we are waiting to hear what the Department of Energy thinks about our ideas. If they approve, and if TVA somehow offers us a wholesale rate which makes the $4 million investment a wise one, we will start a new project in Glasgow that is the biggest thing we have done yet. It will be bigger than our decision to install a broadband network back in 1988. It will involve the installation of seven thousand new electric meters which will be able to communicate through the internet. It will involve us convincing you to allow local contractors to install internet compatible thermostats and water heater switches. It may involve the opportunity for us to partner with local vendors to offer new internet compatible appliances like water heaters and refrigerators. It may involve us working with local HVAC vendors to offer advanced HVAC systems that make ice during off peak hours and then use that ice to cool homes and businesses during the peak hours.
We will talk about all of this, and more, in Part 3 of this series.
Smart Grid and Stimulus Money are two terms that surely no one has been able to escape over the last several months. Those of you who are familiar with the activities of the EPB over the last twenty plus years will know that our broadband project was born with the objective of changing everything about how electric power is metered, sold, controlled, and purchased. While we have been calling that concept “infotricity” over the last couple of decades, the new catch phrase applied to the idea of using broadband to change the way electric power operates is “smart grid.” It really is not a new idea at all.
A year ago TVA approached us with the idea of using Glasgow as a test site for our long-held ideas about using broadband to control loads like air conditioners and water heaters. We gladly accepted their offer to purchase the devices that need to be tested for performance and reliability. However, before that project could ever get moving, along came this economic mess and the passage of the legislation that earmarked tons of federal monies for infrastructure projects, including smart grid projects. Both TVA and TVPPA (the trade association of the TVA power distributors) became totally consumed with the prospect of getting $400 million worth of this money by creating a regional consortium of TVA distributors willing to commit to installing smart grid technology and demonstrating how the technology might be used to mitigate the need for additional generation facilities. As you might expect, Glasgow is right in the middle of this whole discussion.
While we agreed to work with TVA and TVPPA and EPRI and Oak Ridge National Laboratories on this consortium, we also monitored the application process to see if we also wanted to apply for some of the funding separately from the consortium, assuming that we could qualify for some of the monies directed toward smaller projects and smaller municipalities. The EPB team did a great job getting up to speed on the rules of the game (which are more complicated and voluminous than anyone dreamed possible) and we developed a game plan for our possible projects along with the consortium plan.
The prospect for us attracting stimulus funds for our smart grid ideas seems to be a pretty good possibility. However, after the team analyzed the rules, it became clear that we could not hedge our bets by applying with the consortium and then again on our own. So, we are putting all of our eggs and effort into the TVPPA-EPRI-TVA-ORNL basket. We have submitted our preliminary request for funding that would allow us to install the muNet meters at each of our 7,400 homes and businesses. We asked for money that we can use to pay local contractors to install IP-based water heater switches and thermostats in every home and business in Glasgow with electric water heating or HVAC. We asked for money to install IP-based switches and sensors all over our electric network to allow for fault location and automatic isolation and redirection of power flow. In summary, we asked for everything we could think of and then some more. The total estimated cost for the Glasgow portion of the TVPPA application comes to over $14 million. Will this actually happen? We don’t know. If it does happen how much might Glasgow EPB be expected to furnish? That is also unclear, but it might be as much as 30% of the cost! Are we willing to risk spending $4 million to get $14 million worth of technology for the people of Glasgow? That would be a simple question if the $4 million were available and if the ultimate TVA rate design were known. If those variables were filled in we could do a simple present worth analysis of the future savings made possible by the technology. However, that is not the case, and it will not be the case for any of the cities contemplating this matter.
So, we have applied for the funding and we are waiting to hear what the Department of Energy thinks about our ideas. If they approve, and if TVA somehow offers us a wholesale rate which makes the $4 million investment a wise one, we will start a new project in Glasgow that is the biggest thing we have done yet. It will be bigger than our decision to install a broadband network back in 1988. It will involve the installation of seven thousand new electric meters which will be able to communicate through the internet. It will involve us convincing you to allow local contractors to install internet compatible thermostats and water heater switches. It may involve the opportunity for us to partner with local vendors to offer new internet compatible appliances like water heaters and refrigerators. It may involve us working with local HVAC vendors to offer advanced HVAC systems that make ice during off peak hours and then use that ice to cool homes and businesses during the peak hours.
We will talk about all of this, and more, in Part 3 of this series.
Wednesday, August 5, 2009
Another World - Part 1 of 3
Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing. - Arundhati Roy
That quote is far more than a couple of elegant sentences – it beautifully expresses an undeniable truth; the economic and changing climate situations we find ourselves in are not temporary. Rather, they represent seismic shifts in the way we are going to live out the rest of our lives. Another world is coming, and Glasgow can be among the first to embrace it, or, we can attempt to make the past last a few more years and miss the opportunity. I sure hope we will choose the former.
While tidal changes in the way we live are about to inundate us, the particular subject of this series of posts is electric power and the way it is produced, marketed, priced, and consumed. For way too long, we have sold electric power as if there is an infinite supply available (there is not) and we have priced it as though it costs the same to make it throughout the day (it does not). These confusing signals have been sent to you by your friendly local and regional electric power utilities, and we should be ashamed of ourselves.
After thirty five years in this business there is one thing I know – almost no one really understands what a kilowatt hour (kWh) is, nor do they know what one costs. Obviously, this is a real problem when it comes to the discussion about changing the way folks purchase and use them! A kWh is a volume of energy equivalent to using 1000 watts for one hour. Think of a kWh as a measure of volume much like a gallon of gasoline. In Glasgow, a homeowner presently pays a bit over eight cents for each kWh consumed, no matter what time of day it is consumed, and therein lies the major problem.
On an average summer day in Glasgow (and just about any of the ten thousand cities across our country), relatively little electric power is consumed for sixteen hours per day. However, between noon and 8:00 p.m., nearly everyone is using a large amount of power. We call those hours “peak” energy hours, and that is when all manner of expensive and carbon dioxide producing resources are called upon to meet the peak demand. KWh used during those hours should not be priced the same as the other sixteen hours, but that is exactly what we have been doing for many decades.
When gasoline demand goes up, we expect the price at the pump to rise. When a popular event lands in a particular city, we expect the price of motel rooms to jump. We are not surprised that it is more expensive to fly to Hawaii than it is to fly to Atlanta. Front row seats at a basketball game are more expensive than seats in the nosebleed section. So why have we not priced electric power the same way? Well, one reason is that it is more complicated to meter and bill, and most electric utilities have had a long held affinity for doing things simply. Another reason is that you, the customer, also have a warm feeling for simplicity and have given us signals for years that you would rather just pay a simple “all you can eat” rate instead of one which is different depending on the time of day, and we have obliged. As a result, those that use energy wisely and try to avoid on-peak usage are paying higher rates to subsidize the habits of others who make major contributions to the peak demand in the afternoons.
Over the last several decades our power supplier, TVA, has also committed a lot of sins by designing a wholesale electric rate that does not differentiate between efficient use and inefficient use. At the same time, our species has continued to develop residential areas farther and farther from the centers of towns. We have called this growth and we have been quite certain that all growth is good. As a result, we have converted productive farmland into inefficient suburbs and the utilities have encouraged that by charging the same rate per kWh for energy delivered out into the boondocks as they charge for the high density areas in towns. This is more subsidy where the homes packed in at fifty per mile of power line pay more so folks can enjoy cheap power out where there are three homes per mile of line. We created this mess through inattention to the issues and a conviction that all growth is good and that everyone should help finance that growth. Man, have we been stupid or what?
Our past sins are now being illuminated in a variety of ways. All-you-can-eat pricing for electric power resulted in towering peak demands that have required the construction of ever more peak power generation plants. More power plants resulted in increasing amounts of carbon dioxide (and mercury and other poisons) being pumped into our air and water (Wendell Berry, noted Kentucky author and poet, calls this “pissing in our own cistern”). Those pollutants have contributed greatly to changing our climate, which, in turn, is requiring even more generation plants to be built to keep us “comfortably numb” in an increasingly hostile climate. The present economic collapse is the icing on this cake of woe. Suddenly those who are paying more for energy to provide lower cost power for those who use energy inefficiently are demanding an end to that practice.
All of these planets are lining up to create a new world where electric power, like so many other commodities, is priced at the actual cost of production, including all of the environmental damage costs, fuel costs, delivery costs, and maintenance costs (another subsidy comes when folks with no trees on their property pay the massive costs involved with trimming and removing trees around power lines in the yards of their neighbors). A new world is coming and it is not coming quietly. Stay tuned to this blog for parts two and three of this series.
That quote is far more than a couple of elegant sentences – it beautifully expresses an undeniable truth; the economic and changing climate situations we find ourselves in are not temporary. Rather, they represent seismic shifts in the way we are going to live out the rest of our lives. Another world is coming, and Glasgow can be among the first to embrace it, or, we can attempt to make the past last a few more years and miss the opportunity. I sure hope we will choose the former.
While tidal changes in the way we live are about to inundate us, the particular subject of this series of posts is electric power and the way it is produced, marketed, priced, and consumed. For way too long, we have sold electric power as if there is an infinite supply available (there is not) and we have priced it as though it costs the same to make it throughout the day (it does not). These confusing signals have been sent to you by your friendly local and regional electric power utilities, and we should be ashamed of ourselves.
After thirty five years in this business there is one thing I know – almost no one really understands what a kilowatt hour (kWh) is, nor do they know what one costs. Obviously, this is a real problem when it comes to the discussion about changing the way folks purchase and use them! A kWh is a volume of energy equivalent to using 1000 watts for one hour. Think of a kWh as a measure of volume much like a gallon of gasoline. In Glasgow, a homeowner presently pays a bit over eight cents for each kWh consumed, no matter what time of day it is consumed, and therein lies the major problem.
On an average summer day in Glasgow (and just about any of the ten thousand cities across our country), relatively little electric power is consumed for sixteen hours per day. However, between noon and 8:00 p.m., nearly everyone is using a large amount of power. We call those hours “peak” energy hours, and that is when all manner of expensive and carbon dioxide producing resources are called upon to meet the peak demand. KWh used during those hours should not be priced the same as the other sixteen hours, but that is exactly what we have been doing for many decades.
When gasoline demand goes up, we expect the price at the pump to rise. When a popular event lands in a particular city, we expect the price of motel rooms to jump. We are not surprised that it is more expensive to fly to Hawaii than it is to fly to Atlanta. Front row seats at a basketball game are more expensive than seats in the nosebleed section. So why have we not priced electric power the same way? Well, one reason is that it is more complicated to meter and bill, and most electric utilities have had a long held affinity for doing things simply. Another reason is that you, the customer, also have a warm feeling for simplicity and have given us signals for years that you would rather just pay a simple “all you can eat” rate instead of one which is different depending on the time of day, and we have obliged. As a result, those that use energy wisely and try to avoid on-peak usage are paying higher rates to subsidize the habits of others who make major contributions to the peak demand in the afternoons.
Over the last several decades our power supplier, TVA, has also committed a lot of sins by designing a wholesale electric rate that does not differentiate between efficient use and inefficient use. At the same time, our species has continued to develop residential areas farther and farther from the centers of towns. We have called this growth and we have been quite certain that all growth is good. As a result, we have converted productive farmland into inefficient suburbs and the utilities have encouraged that by charging the same rate per kWh for energy delivered out into the boondocks as they charge for the high density areas in towns. This is more subsidy where the homes packed in at fifty per mile of power line pay more so folks can enjoy cheap power out where there are three homes per mile of line. We created this mess through inattention to the issues and a conviction that all growth is good and that everyone should help finance that growth. Man, have we been stupid or what?
Our past sins are now being illuminated in a variety of ways. All-you-can-eat pricing for electric power resulted in towering peak demands that have required the construction of ever more peak power generation plants. More power plants resulted in increasing amounts of carbon dioxide (and mercury and other poisons) being pumped into our air and water (Wendell Berry, noted Kentucky author and poet, calls this “pissing in our own cistern”). Those pollutants have contributed greatly to changing our climate, which, in turn, is requiring even more generation plants to be built to keep us “comfortably numb” in an increasingly hostile climate. The present economic collapse is the icing on this cake of woe. Suddenly those who are paying more for energy to provide lower cost power for those who use energy inefficiently are demanding an end to that practice.
All of these planets are lining up to create a new world where electric power, like so many other commodities, is priced at the actual cost of production, including all of the environmental damage costs, fuel costs, delivery costs, and maintenance costs (another subsidy comes when folks with no trees on their property pay the massive costs involved with trimming and removing trees around power lines in the yards of their neighbors). A new world is coming and it is not coming quietly. Stay tuned to this blog for parts two and three of this series.
Subscribe to:
Posts (Atom)