Steep Learning Curve: Smart Grid 101 Can Be Difficult


Utilities might be well-versed in the workings of the traditional electrical infrastructure, ratepayers organizations and local power regulations, but when it comes to the smart grid, it can be difficult to know which technology to choose and when to proceed. And, unfortunately, when utilities make poor decisions about rollouts, that can have serious consequences for everyone. The latest example of this comes from Texas utility Oncor (h/t), which jumped the gun and bought 898,000 smart meters before the local public utility commission declared that the utility’s meters needed to provide certain services, which, lo and behold, Oncor’s purchased meters did not provide.

Oncor now wants its customers to pay a collective $93 million in rate hikes for meters many residents never saw. A judge said the utility could charge for only a portion of the lost funds, but as a result, Oncor’s probably about as popular among its customers as Miss California in the Castro. And “smart grid” and “smart meters” are likely getting a bad reputation in that neck of the woods.

The lesson here is that, when it comes to the smart grid, utilities need to follow the advice of the after-school special: Get a good education. There are a lot of choices and complex moves concerning technology, vendor and timing; utilities need to make sure they stay informed about their options. Interestingly enough, the companies that are building the networks and platforms are increasingly acting as consultants and educators. That’s the role that Silver Spring Networks has found for itself; the company told me in an interview last month that consulting to utilities has grown into a substantial portion of its business lately. Hopefully more utilities will spend on learning how to tackle the smart grid, and we’ll avoid more wasted purchases.



Coming from more “normal” businesses, I’m more familiar with the idea that companies take calculated market risks and invest in new technologies in anticipation of returns — and they take all the returns if the investment pays off, and pay all the bills if the investment goes bust.
These utilities are more of a regulated business (although that is changing in some jurisdictions) — and they have a totally different operating mentality. I’m not justifying it, but it was eye-opening to look at some of these companies and their operating procedures: they are geared to gain budget for risk before taking it. One possible justification is that they don’t reap all the reward due to price limits. Clearly in this case they should have worked closer with their regulators if they expected to get help later.

All of this aside, it is surprising to me to see Earth2Tech criticizing the essential effort here, which was to be out front with new technology that could actually help reduce electricity usage. So they bet wrong! That isn’t really the mistake here: the mistake is trying to force customers to suck up the bill from a lost bet.

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