FERC vs NERC: A grid control showdown over cyber security

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WWW.INTELLIGENTUTILITY.COM /// JULY/AUGUST 2011
48
Illinois and ComEd
In a case that now resembles the proverbial Gordian knot, Illinois utility
Comonwealth Edison learned in November 2010 that making it past consumers
and special interest groups isn’t enough—a utility can stub
its toe on procedure, when an Illinois appeal court ruled on a
motion by the state attorney general to deny smart grid cost
recovery for ComEd. It is not enough to try to reduce costs
with innovative programs; ComEd was going to deploy over
100,000 smart meters linked to home energy management
systems to lower costs and give customers more control. However, it also matters
how a utility seeks cost recovery; ComEd made the mistake of using a special
“rider,” which carries specific restrictions, which the court deemed inappropriate
“single-issue ratemaking.”
The net-net of this decision will most certainly be to slow smart grid deployments
still further and likely to shift more of the burden for installation from
utilities to vendors, making it still more difficult for small companies to compete
in this industry. It will be hard to challenge other utility managers for being
highly methodical and deliberate regarding innovative approaches to industry
reform after ComEd’s experience and public wrist-slapping.
Colorado and Xcel Energy
One of the earliest, most ballyhooed examples of smart grid
innovation though has to have been the Smart Grid City pilot
in Boulder, Colorado, where Xcel Energy promised in 2008 to
showcase the potential of smart grid with a solution cooked up
with a bevy of vendor partners. However, in an outcome described
by various parties as pioneer trial and error, miscalcu-
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lation, hubris, and tragedy, the project
suffered from excess press and challenging
delivery conditions, running
into multiple project cost overruns
along the way (some attributed delays
to the decision to lay fiber line through
granite in the Rocky Mountains).
In November 2010, the utility
received preliminary approval for
$44.5 million in cost recovery for
the project originally budgeted
at $15.3 million (March 2008),
$27.9 million (May 2009), and then
$42.1 million (February 2010). At
the time of this writing, the case was
under review by Colorado regulators,
but based on arguments so far, prognosticators
expect the full recovery to
be whittled down to a partial recovery.
Among the ultimate lessons learned
here for utilities may be the value of
setting achievable expectations and
the wisdom of gaining cost approvals
up-front, before proceeding to break
ground on a smart grid project.
The book is published by ARTECH HOUSE
(http://www.artechhouse.com).
Aclara 17 www.aclara.com
Bentley 13 www.bentley.com/substationec
Clasma 39 www.gridweek.com
Elster 1 www.elster.com
EnergyCentralJobs.com 37 www.energycentraljobs.com
Enspiria 29 www.enspiria.com
iPad 43 http://itunes.apple.com/us/app/
nxtbook-newsstand/id384066971?mt=8
Itron 3 www.itron.com
IU Franchise 35 www.intelligentutility.com
IU.com 41 www.intelligentutility.com
K11 30-31 www.knowledgesummits.com
KEMA 7 www.smartgridsherpa.com
Oracle outside back cover www.oracle.com/goto/utilities
Schneider inside front cover www.sereply.com
Sensus 13 www.sensus.com/buildit
Siemens 5 www.usa.siemens.com/energy
Transmission Hub 27 www.transmissionhub.com/trial
URMC inside back cover www.utilityrisk.com
Ventyx 23 www.ventyx.com
Verizon 19 www.verizonwireless.com/utilities