How Utilities Can Implement Smart Grid Projects While Keeping The Consumer In Mind

Posted on August 10th, 2011 by

Mark Munday, Executive Vice President of Elster North America, discusses the importance of keeping the consumer in mind when implementing smart grid projects.

Full Transcript:

Ben Lack: I’d like to get your thoughts on what is the existing state of the smart grid infrastructure and how has the federal government helped or hurt the advancement of smart grid infrastructure developments in the U.S.
Mark Munday: I think we would generally agree with the broad definition of smart grid being from generation to inter-tide to transmission to distribution to the consumer meter into the home. That it is that full, complete system that becomes the smart grid; the pieces that need that intelligence. Historically, we would say that there has been a lot of smart grid work already done particularly at the generation, the inter-tide, the transmissions level. But from the sub-station down is where there has been not a technology issue, as much as an economics issue, on how can you cost effectively afford to automate and to provide instrumentation for the distribution system and then into the home. What has come along in recent times and why these are kind of married together is the concept of advanced metering infrastructure. For us, our focus on advanced metering infrastructure is on the infrastructure piece. Others put the focus on advanced metering. But advanced metering is an application that funds the infrastructure in our mind upon which you can now have a convergence of distribution automation and that advanced metering infrastructure (AMI). You can enable things for the consumer within their home, and you can provide the automation on the distribution systems, that gains some huge efficiency. You basically turn the system from an open loop control system into a closed loop measurement and control system where there’s huge savings to be accomplished from that. That’s a little bit of the background of what we would say it is. Now, the government has, is huge as you know. There are many branches engaged in activities around the smart grid. The stimulus actually has been engaged all across the smart grid. There have been projects that have dominated up in the transmission and generation areas. Particularly, when you start thinking to the phaser controls in those pieces, that’s actually been a major part of the stimulus infrastructure. Although a lot of people have assumed it’s all been about smart metering and meters, that has not been the case, hasn’t all been about that, as a matter fact. It is a piece, but it’s not a majority piece of where the stimulus money come in. But it is something that has helped focus some attention on the smart grid space to which you have had a lot people want to enter the space– and that can be good or bad. You’ve had a somewhat of a little bit of evaluation of what is the stimulus going to do up front? So, there were a lot of questions around the stimulus but most of those have now been resolved and you’ve had projects move forward, and other projects starting to move forward now in some accelerated fashion from that stimulus money.The other involvement of government obviously has been trying to help define the standards and the types of inoperability that’s going to be needed because there is no single provider of the smart grid. The smart grid is made up of all types of instrumentation and control equipment that needs to be tied together. So, the government has spent some time in trying to get the right industry groups together, which we think is the right approach to get the standards defined on how efficient it potentially can operate.
Ben Lack: Is that really the next step as far as responsibility that the government need to take on is providing common standard for the industry? Or is that really something that the private sector needs to do on its own?
Mark Munday: To me, and I will be blunt with you, it’s a mistake for the government to define the standards. I think where the government has actually taken the position is they want to have the industry to define the standards but the government to encourage and to facilitate the mechanisms to get those standards defined. And I think that is an appropriate position of the government.
Ben Lack: Aside from establishing appropriate standards, what are the next steps for a company like yours to continue the growth of smart grid implementation?
Mark Munday: Actually one of the big issues for utilities and for the industry, in general, is many of the benefits of the smart grid are not necessarily reflected in the regulatory framework. For example, if a utility encourages energy savings that they’re not always allowed to get recovery for that.
So, if I’m running a more efficient infrastructure and I’m doing this for the benefit of the consumer, the regulatory environment needs to allow the utility to be encouraged from a business standpoint, from a financial standpoint, to move forward for the benefit of the consumer in those areas.
Ben Lack: Like decoupling in California?
Mark Munday: Yes. That is one of the big issues is how one decouples the kilowatt-hours, the energy sales in the business.
Ben Lack: How does Elster really play in this game? Are you just really trying to educate your customer base and through your solutions push them in that direction? Or are there other strategies that you guys take to move the needle forward in a way that you see is best?
Mark Munday: I think, as you heard my definition of smart grid, it’s actually very broad and it’s been actually occurring for quite some time. We have been engaged in many of the aspects of the smart grid from actually the late ’80s. And when I say engaged, what I’m referring to is we did some of the very first critical peer pricing in demand-response studies. Our legacy is from Westinghouse and ABB where we were engaged with outtage management systems (OMS) and distribution management systems– those did not come over with Elster from ABB but we have been very engaged with that in the past. Where we are today is we are a solutions provider that we believe is somewhat unique in that we approach the systems and solutions from a utility stand point particularly recognizing from a sub-station down the types of issues that exists, the types of things that can be monitored from a generic measurement control device, which now is embodied in a meter and can provide things such as power quality, outage information, and current voltage levels, tampering indications, and do other control types of activities within that device. And then, we look at providing the right mix of communications technologies, which can be broad band. It can be a very good controlled meshed system. It can be lower orbiting satellites. It can be basically anything that matches up with the utility needs economically and benefits what they’re trying to accomplish. But the key that we’ve seen for these to be successful, and what we do to encourage utilities to be successful, is we encourage them first off to have a vision. Know that smart grid is not a destination. Smart grid is actually a journey. You’re going to keep to getting smarter. You’re going to keep finding more benefits, things to do with it. So, have a vision for that journey where you’re trying to get to down the road. I think everyone sort of recognizes that. Although, some utilities implement strictly a smart metering strategy. Others try to implement a complete turn over their entire system. We think both of those are incorrect. We think you start off with your vision. You remember everything is about the consumer. Even if it’s energy efficiency on the distribution network, you’re doing that as fiduciary responsibility to the consumer as a regulated utility. And so, if it’s energy efficiency, it’s about the consumer. If it’s service switches, it’s about the consumer. If it’s a rate offering, it’s about the consumer. If you have that mindset and you implement the things thinking how is it going to benefit the consumer, you have the right mindset for this to go forward. You select the low hanging fruit. You don’t try to turn all your systems upside down on Day 1. You try to implement the things that have immediate payback so that you can pay for the system and continue to find your further path along this journey towards your vision. And then, you don’t forget the basics. You don’t forget that it is about I’ve got to make sure it’s safe. I’ve got to make sure it really does work and it’s not just vapour ware. I need to make sure that at the end of the day it’s revenue quality that I can prove it. If it’s not good enough, just to be accurate enough. It must be able to prove it to a consumer to avoid concerns that often people have. You mentioned a few areas where people are having difficulties. You don’t hear these same issues or complains out of Arizona, for example, where you have people like APS and Salt River Project who have deployed or in the process of deploying basically their entire network. Almost all of Arizona is under a smart grid AMI system. You don’t hear these things in Ontario where you’ve had the systems up and operational for multiple years bringing back load profile data, doing time-of-use billing every day to find the information to consumers. As a matter of fact, in Arizona, the Salt River Project every year wins customer satisfaction reward. It’s because they think of it from a consumer’s standpoint.
Ben Lack: I totally agree with your view points. It’s got to be about the customer and I think the industry has learned from some of the issues that have come up with smart grid implementations in California and in the ERCOT region in Texas. But at the end of the day, people can say you got to educate the customer. How do you help utilities along to really give them the right tools to educate the customer because you could say it all day long, but you got to make sure that they’re listening at the same time, right?
Mark Munday: In many ways the utilities that are successful already have a very strong mindset towards the consumers and part of what we do is we help connect our customers to each other and to share those things. But the types of learnings that we would share with people are first off, you can’t over communicate. You got to be out early with your messaging. You have to make the messaging individual. You have to go out to individual consumers. You have to provide them information on when you’re going to be in their neighborhood, what you’re going to be doing, what the benefits are to them, and why this is really about them and not about the utilities saving money or whatever. I might be about me saving money but it’s so that your bills go down or so I can provide you with this extra service or those things. And you need to keep those somewhat simple so that you can show the proof points immediately, that you can get back to them and show them I can be responsive to your needs. I can provide you the information. Let me give you an example there. Just something as simple as I will now allow you to choose your billing date. And so, you’d probably get paid twice a month or every two weeks or whatever. I can now have the flexibility. I can make your billing date right after your pay day so you can take care of that while you still have money so you know what the bill is going to be and so forth. I can provide you threshold information. What we find is most consumers don’t want to sit there and monitor what’s happening every hour of the day. They want the utility to tell them an exception. So if my bill is going to project out to be bigger than a certain amount, that I want to tell you what it is, then send a text to my cell phone. Just let me know my bill looks like it. If I consume using power like this, I’m going to exceed my budgetary number that I told you I wanted to have warning about. Simple things like that which are fairly easy to implement but immediately the customer can see the benefit. Of course, you can have stuff up on the web and people can go up and see that. But they get a lot of benefit just from knowing the utility is trying to address their needs and is providing some simple things for them on the exception basis. They do not have to do the work, the utility is doing that for them, is a way to keep the consumer engaged in the field of benefit of what’s occurring.
Ben Lack: Do you think that utilities are moving more towards in addition to becoming a provider of energy, also a service provider of new solutions that they might not have offered in the past?
Mark Munday: It depends upon your definition of utility. I think a lot of the municipals are looking towards that. I think the IOUs tend to be between between a rock and hard place. Because they’re regulated utilities that really have to keep the public utility commissions happy which typically means they have to make sure there’s no complaints from consumers. They need to provide the services that are required to meet the PUC requirements that the regulated environment they’re trying to operate in. But if they get engaged in something that causes the consumer to be unhappy or potentially inconvenienced or potentially blame the utility for something that they may have nothing to do with, then the utilities tend to recoil a bit from engaging in those. For example, if I need to get inside the consumer’s home, I suddenly open up a lot of potential liabilities to a utility. I first off have to get it scheduled and I may or may not ever be able to get it scheduled to get the home. Second if it’s my control device or measurement device and it’s on the home of a consumer’s piece of equipment; if that piece of equipment fails, suddenly it’s my fault whether or not I cause it to happen or not, it becomes my issue. And so, I’m a bit hesitant to do things that a consumer might feel inconvenienced by or might question whether or not I caused it. So, that’s a long way around to say I think that most of the IOUs want to avoid getting into in-home services. They’re quite happy to provide information and contact and control interfaces. There are different IOUs who would want to do this but I’m saying, in general, I think most of the IOUs would prefer to let the consumer deal with what’s inside the consumer’s home and the services there and that they’d prefer to stay on their distribution side with what they’re doing. Does that make sense?
Ben Lack: It does. I got a final question for you and this will tie it all together. You’ve been in the industry for over 25 years, is that correct?
Mark Munday: Actually, 31 years.
Ben Lack: You’ve been in the industry for over 30 years, I’m curious to know why you have spent so much time in this industry. What is it about the industry that interests you and has gotten you to decide to spend your time on working on these types of problems and solutions?
Mark Munday: Interesting enough, I came from the semi-conductor industry and many of my friends ask me why on earth are you leaving the semi-conductor industry to go into the utility industry. Quite frankly, the utility industry has some unique issues to be dealt with. If you think about trying to make measurements from -40oC to +85oC to keep that to the 0.1% of reading accuracy, not a full scale but a reading over a thousand and one dynamic range with 10KV, 15KV surges, there’s a technical issue there, which you may have guessed I did come from a technical background.The second piece is the people in this industry are really incredible people. I do not know of another industry that when your competitor next door has a storm that takes down the lines to his customers, you hop in your truck and you go over and you spend all night and all weekend helping him get his customers back up and running. They are incredible people, really caring about the community. I know sometimes they get different press as someone who’s just out to make the buck, but if you work with the people in the utility, you find that they really care about the community. They really want to be fair and it’s really a big, in a way, family of people trying to look out for each other, and it’s great to be involved with them.

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