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Smart Grid Gets Clipped in Michigan

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Updated: Yet more evidence that the smart grid industry is facing pressure to get cheaper, and fast: Michigan utility Consumers Energy may be cutting $400 million from its $500 900 million smart grid spending plan over the next five years, reports Smart Grid Today (subscription req.).

Consumers’ parent company, CMS Energy, is under intense pressure from the Michigan Public Service Commission to shave even more from its capital plans to avoid hitting the state’s already hurting economy with rate increases. Just how the proposed spending cuts might affect smart grid efforts, including a pilot project with Big 5 meter maker Elster and a try-out of WiMax-networked smart meters with General Electric (s GE), remains to be seen.

Expect more decisions like this in the future. State utility regulators around the country are denying rate increases for smart grid projects that won’t quickly pay off in cheaper power. In the past two months, Maryland state regulators forced Baltimore Gas & Electric to pay for its $500 $900 million smart meter deployment without raising rates, and Hawaii’s Public Utilities Commission rejected Hawaii Electric Co.’s plan to raise rates for smart grid projects.

Smart meters in particular are getting a bad rap. Both California’s Pacific Gas & Electric and Texas’s Oncor face lawsuits from customers who claim that their new smart meters have improperly jacked up their power bills, and the complaints have also spread to broader, more integrated smart grid projects, like Xcel Energy’s (s xel) over-budget SmartGridCity pilot in Boulder, Colo.

The big question for the smart grid industry is how to adapt to the new era of frugality. Certainly, the $3.4 billion in Department of Energy smart grid stimulus grants have helped, but, as the BG&E case proves, even having some $200 million in DOE grants in hand can’t protect a utility from having its rate increases questioned. Beyond lowering the cost of smart grid deployments, it’s clear that utilities will be trying to front-load efforts to deliver savings to utility customers: perhaps by accelerating plans to connect smart meters to in-home energy management platforms.

For more research on energy management check out GigaOM Pro (subscription required):

Smart Algorithms: The Future of the Energy Industry

The Developer’s Guide to Home Energy Management Apps

Home Energy Management: Consumer Attitudes and Preferences

Photo courtesy TpolyG

2 Responses to “Smart Grid Gets Clipped in Michigan”

  1. 1.   The existence of plug-in cars might be a big boon to electrical utilities so they can afford to further broaden renewable energy base.  

    2.   Better still, plug-in cars will charge mostly overnight with the untapped electricity without having to build another power plant.

    3.   To the best of my knowledge, EVs manage to power houses for upwards of 3 days or so. Also, for a majority of motorists, their driving time is said to stand at around 1 hour, meaning the low-risk of overload.

  2. Why would anyone be surprised. The smart grid meters have been in question by a whole lot of the rate payers who saw bills increase upon installation of the devices. The suppliers response, studies resulting in data supporting the supplier and the out sourced contractors meter conversions. The fact that the studies were payed for by the suppliers vouching for the accurracy.
    It reminds me of investment rating companies paid by the companies they were rating, or the drug companies paying others to study the safety of new drug products who were being paid by them, or the gambling industry vouching for slot machines with studies based on data from firms who they were paying.

    Hard to pass the smell test, no surprise given the obvious cost of being caught already being factored in to the sale price equation as it relates to the profits/revenue gained in the interim.

    It is too bad given the good that could come from endeavors based in honesty. “What the heck do I know”.