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August 24, 2020

Facing scrutiny over rate increases, power outages, Eversource quietly files $500M smart-meter plan

PHOTO | EVERSOURCE ENERGY

Utility giant Eversource has been in the hot seat this past month, first for issuing unexpectedly high electric bills in July, and soon after, for its slower-than-desired response to an 800,000-customer power outage caused by Tropical Storm Isaias.

That would draw criticism, regulator probes and negative press in a normal year, but frustration levels seemed to boil over, as the events all took place against the backdrop of an economy battered by COVID-19, with an anxious population that’s spending far more time at home.

Perhaps due to its sudden public relations emergency, Eversource hasn’t sought to draw much attention to an approximately $500-million plan it filed with state regulators on July 31 — days before Isaias struck the state — to install 1.2 million smart meters across Connecticut.

The proposal, if approved by the Public Utilities Regulatory Authority (PURA), would further increase consumer and business electricity rates — by about $214 million over the first five years.

But it would also have some potential consumer benefits, including improving Eversource’s response to future wide-scale power outages, enabling greater adoption of variable “time-of-use” electricity pricing, paving the way for growth of electric vehicles and renewable power sources like solar and wind, and reducing overall energy usage and peak demand.

The plan’s awkward timing was pure happenstance. PURA, which is now investigating the reasons behind Eversource’s increased July rates and preparation for the recent storm, had requested months ago that the Boston/Hartford-based utility and United Illuminating submit the so-called “advanced metering infrastructure” (AMI) proposals by July 31, as part of its ongoing analysis of infrastructure investments that will be needed to create a more modern electric grid.

PURA is slated to decide by year’s end on what sort of smart-meter investments — if any — to permit utilities to make.

Eversource’s plan is by far the larger of the two proposals, as United Illuminating previously invested in smart meters and also has a smaller electric territory in the state.

Utilities are permitted to earn a margin on such investments of just over 7%, which means Eversource could net tens of millions of dollars if its plan is approved.

Marissa Gillett, PURA’s chairman, who has spearheaded the agency’s grid-modernization review since Gov. Ned Lamont hired her last year, said smart electricity meters located in homes and commercial buildings can be a foundational technology that ultimately benefits ratepayers, utilities and the environment.

But Gillett said she’s cognizant of the timing of the Eversource proposal, which, even if PURA determines is worthwhile, would increase rates in a state already known for having some of the most expensive electricity prices in the country.

“I would say at this point that we will definitely be paying a lot of attention to the price tag,” Gillett said. “Ratepayers are looking out at the system now and they know they’ve spent hundreds of millions of dollars on grid hardening and they’re concerned they haven’t gotten the return on their investment for how the utility has deployed it.”

To put the proposed smart-meter investment in context, Eversource has spent a nearly identical amount ($442.5 million) on storm response and cleanup over 28 major storms since 2012, according to data PURA provided to HBJ.

Still, Gillett isn’t backing off of her push to explore the best pathways to a futuristic grid. If anything, the recent storm proved that efforts to modernize infrastructure must be accelerated, she argued.

Eversource’s pitch

 

Eversource’s 85-page proposal estimates the new smart meters would increase annual bills for the typical residential ratepayer in Connecticut by less than $2 in the first year, escalating from there, to about $137 per year in year five. Other rate classes, such as those that include small- and medium-sized businesses and manufacturers, would see varying impacts on their bills by the fifth year, ranging from an extra half-cent per kilowatt hour to just over one cent, depending on their rate category.

Over the 20-year life of the meters, Eversource says the benefits produced would exceed the costs, albeit slightly, breaking even by the 17th year.

In a statement, Eversource spokesman Mitch Gross said the high-tech meters “would allow for real-time information regarding customer energy use, as well as rate options where customers could shift their electric usage to off-peak times to help save money on their electric bill.”

Eversource said that many of the potential benefits, such as reductions in carbon dioxide emissions, are difficult to quantify financially and are therefore not captured in its cost-benefit analysis.

Helping with outages

Smart electric meters could also improve Eversource’s ability to respond to future storms and outages by giving it the ability to automatically detect where the power is out — without needing customers to call — and more efficiently allocating trucks and repair crews to where they are needed most.

Asked if smart meters would have led to fewer outages or a faster recovery from Isaias, Gross said extensive tree damage caused by the storm’s high winds were to blame for the situation.

However, Eversource’s own proposal, as well as other smart-meter experts, claim the technology could provide real benefits, including more accurate planning for outages and restoring power more quickly and efficiently when infrastructure is damaged.

Eversource’s analysis includes $83.5 million in benefits over a 20-year period related to outage restoration and customer reliability, including an improved ability to coordinate mutual aid storm response crews and automate the typically labor intensive process of identifying the remaining pockets of so-called “nested” outages in the final days of a storm-recovery effort.

While each storm is unique, Eversource estimates that smart meters could reduce outage durations by about 12%.

AMI has a mixed record

PURA’s review of utilities’ smart-meter proposals will come following regulators rejecting large meter deployments in other states in recent years, including Massachusetts, Virginia, New Mexico and Kentucky.

In those states, regulators determined that the investments wouldn’t produce sufficient benefits for ratepayers.

For example, Massachusetts utility commissioners in 2018 rejected a proposed smart-meter rollout by three utilities, including Eversource, citing that many of the benefits of automated meter reading had already been realized in the state, as well as potential complications related to how third-party energy suppliers would play into the program, according to Greentech Media.

And in Virginia, Dominion Energy (which owns Conncticut’s Millstone Power Station nuclear plant), has seen its meter plans stymied, as regulators there rejected three proposals in the past two years, according to The Virginia Mercury, which reported that officials there called the utility’s benefit projections “overoptimistic and flawed.”

Indeed, while there were 98 million smart meters deployed across the country as of the end of last year, according to data published by the Edison Electric Institute, most utilities don’t use the meter technology to its fullest potential, researchers with the American Council for an Energy-Efficient Economy (ACEEE), concluded in a recent report.

“This is due in part to organizational barriers including silos and workforce challenges, data access and sharing issues, and difficulties communicating the benefits and costs of AMI to key stakeholders,” the ACEEE report said.

Jess Melanson, chief operating officer of Rhode Island-based Utilidata, which makes software that interacts with smart meters and counts leading meter manufacturers among its clientele, said he is hoping PURA learns from such mistakes and mandates clear directives up front for what Connecticut’s utilities must do with their smart meters. For example, he’d like to see clear targets and metrics related to transitioning away from fossil fuels and towards renewable energy.

“If you’re going to spend hundreds of millions of dollars on grid-edge computing in 2020, you need to ask it to do more,” Melanson said.

Melanson hopes the recent storm and resulting anger at Eversource won’t dim Connecticut’s prospects for leveraging smart meters to their fullest potential over the next few decades.

“I worry more that, in a rush to solve today’s problem, which is ‘I didn’t know whose power was out,’ that we’ll make a giant investment that doesn’t stand the test of time,” he said.

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