Opinion: ‘Your response is required`


“This is a mandatory program” and “Your response is required” is what Xcel Energy states in the two fliers that it sent to 5,000 “smart meter” Boulder homeowners whom it selected to participate in the current phase of its SmartGridCity “pricing pilot.” But the Colorado Public Utilities Commission doesn`t seem to agree.
The PUC was straightforward on this matter in its April 27, 2010 decision. In paragraphs 79-82, the PUC stated, “The Commission appreciates the perspectives of the settling parties and Staff regarding whether randomly selected program participants should be allowed to ‘opt out.` On one hand, we want to minimize the potential of self-selection bias and thereby enhance the expected usefulness of the pilot results. On the other hand, we do not want to antagonize randomly selected customers who do not want to be bothered with making an affirmative selection of pilot rates out of concern that such actions could compromise the overall effectiveness of the pricing pilot or the SmartGridCity project generally. …
We therefore direct Public Service to give the randomly selected customers in Phase II the opportunity of selecting one of four rates available to them as SmartGridCity residents with smart meters. Three of the options would be the proposed pilot rates, and the fourth option would be the standard residential rate that they are presently on.
The randomly selected customers who take no action regarding the selection of the rate shall be automatically placed on the fourth option.”
So, apparently, if you do nothing, you remain on the standard residential rates. (It appears that Xcel was also a bit tone deaf about the “do not want to antagonize” criterion.)
The first two pricing options are so complex that without the ability to download use data from Xcel`s SmartGridCity Web site, they are almost impossible to analyze. But the Reduce-Your-Use-Rebate is actually rather interesting. It is intended to reduce use on 13 to 15 “Peak Energy Event” days per year when peak loads are expected. According to an Xcel customer rep, you would be contacted by 4 p.m. the day prior, and if you reduce your use on the “event” day relative to the day before, you are paid a rebate. This appears to be a no-lose scenario, but if for some reason you actually don`t use much on the day before, you could end making a substantial effort that yields no actual benefit. And if you invest in efficiency improvements that reduce your peak use, you may lose the opportunity to get the level of rebates that you would otherwise qualify for, even though you saved energy.
Can you change your mind, given that Xcel`s tight response deadline of Feb. 25 has passed? I was told that signing up is OK after the deadline if there is still space, that you can opt out if you act soon, and that opting out later might be an issue because the pilot is a year long program with different rates at different times. I came away confused as to the real rules. Also, the rates on the flyers are not the totals you will see on your bill; Xcel`s large pass-through costs are not included.
As with SmartGridCity, Xcel broke its budget for the pricing pilot. In paragraph 66, the PUC decision states, “With respect to costs, Staff expresses serious concerns about the projected costs of the pilot, pointing out that the Company`s final cost projections for the first year of the pilot have almost tripled from the $209,000 figure initially proposed in the Application.” The total cost of these pilot programs will be about $1.5 to $2 million. By the way, Xcel`s final expenditures on SmartGridCity efforts also about tripled the original projections, to more than $44 million.
The PUC also required the ratepayers (that`s us) to pay Xcel back for far more than Xcel`s original projected cost for SmartGridCity. The PUC did withhold some money, but Xcel will receive the full amount if can show tangible benefits, possibly like these pilot programs. If, at the very start, Xcel had done more careful work and the PUC had put the proper level of effort into examining the SmartGridCity design and these pricing pilots, then maybe for a whole lot less money we might have a real “smart grid” that runs on the Internet, provides real time and useful data, and actually saves significant energy and resources.


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