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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.

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