We recently ran a series on dynamic pricing and, in return, received calls and emails from numerous folks wanting to discuss the issues.
You can peruse "Dynamic pricing: the facts are in" by clicking on the link.
One such missive came in from Dan Geiger, electrical director for the city of Chaska, Minnesota. The city of Chaska has a municipal utility and it also provides water service. Chaska has about 10,000 metered electric customers, both residential and commercial, so scale plays into this story.
Geiger provided some thoughts in his initial email, then we spoke yesterday about some of the issues facing hundreds of modestly sized municipal utilities across the country. (Minnesota has about 125 municipal utilities.) He has worked at utilities, served them as a consultant and has been at his current post in Chaska for four years.
"Obviously utilities are still concerned about dynamic pricing and not all studies show it can be effective," Geiger wrote me. "I agree [with the article] that in-home devices are still not realistic, but pricing structures can make a difference. The question is really how much difference.
"As your articles illustrate there are a lot of details that still need to be tested for implementation to determine their effectiveness," Geiger added. "The key to all this is to get an AMI system in place first to be able to do anything. That's where I think the focus should be right now, not trying to force dynamic pricing. Utilities need to grasp the advantages of having the data. I believe dynamic pricing will follow without regulation."
When Geiger and I spoke, it reminded me, among other things, that we all bandy about "the issues" as if generalizations are possible and that many, many utilities struggle to deal with grid modernization based on scale or economics.
"We're a small municipal utility," Geiger told me. "Many smaller municipal utilities are taking a wait-and-see approach. We're keeping an eye on things, though. If we see the benefits, we're ready to adapt.
"Minnesota's municipal utilities have to deal with big issues just like large utilities do. Unfortunately, regulation doesn't always fit all sizes of utilities the same way. That's why I think it's important to understand that all utilities are impacted [by grid modernization and new policies] just like large utilities are."
A brief portrait of Chaska, then a few more of Geiger's points.
Chaska sits on the edge of the Minneapolis metropolitan area. It owns three substations that take power from Xcel Energy transmission lines, steps it down and distributes it through largely underground lines to its customers. The undergrounding is traditional in a land with routine winter temperatures of 20 degree below zero, freezing rainstorms and a plethora of squirrels who depart this world after connecting overhead phases and plunging customers into darkness.
Chaska, like 10 other local municipal utilities, buys its power from the Minnesota Municipal Power Agency. The Agency must bid its generation into the Midwest Independent System Operator (MISO) and buy its electricity back from MISO.
Geiger and Chaska have been running a very small pilot program on 50 meters (both residential and commercial) to test advanced metering infrastructure in its territory. Of particular interest is whether the 900 mHz mesh technology will work in the wooded hills by the Minnesota River valley, in 20 degrees below zero and is reliable for commercial customers.
"Besides the cost of `jumping in,' we've been waiting for a `good fit' with a vendor," Geiger told me.
AMI looks attractive to Chaska for several of the same reasons it's attractive to larger utilities, according to Geiger. First, it offers meter-reading efficiencies and shortens the billing cycle. (Chaska has two meter readers who spend two weeks to read all meters and some require re-reading.) Second, you can't manage what you can't measure—and if a customer complains about a high bill, the utility can explain their use to them. Similarly, with water restrictions in place, the utility can warn folks who cheat to mind their Ps and Qs or face a fine. That's a fairness issue to the customer base that can also lower costs for all, Geiger said. Finally, old meters run slow.
"We know electric meters don't speed up over time," Geiger said, with a chuckle. "Customers should pay for what they use and metering helps capture lost revenue."
So the town is exploring AMI for all these reasons and expects a decision soon on whether to proceed with it.
In Chaska, grid modernization via AMI is driven mostly by the efficiency gains, not by any measurable consumer demand, Geiger noted. Citizens have asked about off-peak energy use programs that reward customers for direct load control by the utility of hot water heaters and air conditioning, and so Chaska is exploring them.
The town itself has taken energy efficiency measures by installing new boilers and building controls at City Hall, thanks to partial funding by a grant from the U.S. Department of Energy under the American Recovery and Reinvestment Act (ARRA).
And that's how it goes in this slice of small town America. Ready, willing, able, after due diligence, testing and crunching costs and benefits.
Intelligent Utility Daily