What The $69 Million Smart Grid Grant Will Mean to Vermont

by Tom Evslin

The nearly $69 million dollar stimulus award Vermont utilities received from the federal Department of Energy (DoE) this week will have a much greater and long lasting effect on the Green Mountain State than hundreds of millions of dollars in stimulus band aids that we are also receiving. When the supplemental Medicaid and educations dollars are gone, we will have bought some much-needed time but still have a huge budget hole to fill. When the utilities finish building a smart grid statewide in the next few years, Vermont will have a stronger economy, a better job market, a cleaner environment, better broadband, a lower cost of living, and a stronger tax base to support the cost of government services with lower tax rates than would otherwise be possible. Almost sounds to be too good to be true but it isn’t – assuming we do a good job with this money and the additional $69 million of investor and ratepayer money with which the utilities will match the grant.

By the end of 2012, Vermont will be the first state in the nation with a smart grid stretching border to border and from almost every consumer, through the transmission network, and back to generating sources. It’s likely that DoE awarded us more than 2% of the total amount of money in the nationwide pool precisely because our size allows us to complete the project quickly and because we submitted the only application in the country which included every electric utility in the state in a massive and ambitious collaboration. We did promise to make detailed reports available on what worked and what didn’t to the rest of the country.

We would have eventually done all this work and paid the whole cost ourselves. The way we distribute electricity is antiquated and wasteful. We consumers have neither the information nor mechanism for adjusting our usage to avoid high cost peaks. Now we will sometimes actually be paid for avoiding peak use because that’s cheaper for the utility than buying peak power on the spot market. Only businesses the size of IBM have been able to afford sophisticated ways to keep peak usage and bills low; now the smallest businesses in the state will be able to have pretty much the same control. We pay for and build transmission and generation capacity for anticipated peaks. The more we can avoid the peaks, the less we have to build. Mass adoption of plug-in cars is unthinkable with a dumb grid; it would just collapse when they are all plugged in at 6PM.

If we had done the job ourselves with the amount of money the utilities can prudently raise, it would take us eight years instead of the three years we plan with the addition of the federal grant. We’ll be leaders and we’ll make mistakes; that’s part of what the federal money is paying us for. But we’ll also get the benefits five years earlier and we’ll lead rather than lag behind the nation in this crucial technology.

Our utilities took a chance in banding together for one big ask instead of applying for smaller amounts separately as most other utilities (which bothered to apply) did. Only 100 out of more than 400 applications got funded. The answer could have just been “no”. But they did envision a fast lane to the future; they did work together; the Department of Public Service, The Office of Economic Stimulus and Recovery, and the state’s Congressional Delegation and the Governor all strongly supported the application, which is an excellent and persuasive document. The Governor took me along on a visit to Vice President Biden, who advised us that a unified application was the best way to assure that a whole coordinated program got funded – but pointedly and properly couldn’t assure us that it would be accepted.

And we got the grant, phew. Now we have to deliver.

Comments

[GreggB]

Should people move back to Vermont to get smart grid jobs?

[Chris Campion]

Tom, while this type of federal investment is really the only kind that provides real dividends to the taxpayers (the road-building analogy here is an apt one), that the smart grid will suddenly broaden and increase our state's tax base is a leap that defies logic. Nothing else has changed in the tax structure of the state, which has systematically built decades of disincentives to economic growth here. That has not changed. State spending went up in a recession, and was only supported through our tax dollars (and foreign borrowing) funneled back to us from Patriarchal Sam.

In many ways, the smart grid is like building a very modern, fast, and economical highway - but that doesn't mean anyone is going to be around to use it. The other costs of doing business in the state need to change or you will be hearing the word "under-utilization" regarding the smart grid for decades to come.

[Richard]

Mr. Evslin,

Thank you for your service to Vermont.

I, for one, have lost almost all faith and trust in most of Vermont's political class.

You, genuinely, seem different.

Others in Montpelier and our municipalities might take note.

[Tom Evslin]

There is no one single answer to our economic problems, as you point out. But this project creates opportunity; if we also reduce some of the constraints on economic activity including too high tax rates, we can grow the base and lower the rates even further.

[Mike Bernhardt]

With the skills and talents of people like Tom, and there are many in Vermont, we can and will start taking the steps to economic viability and fiscal restraint. This is a step in practical thinking. We must not let the recent past of shortsightedness become our states default position.

[Brattleboro_conservative]

I think this smart grid grant is nothing more than putting lipstick on a pig. One more way Montpelier can monitor citizens activities and intrude in our lives. I doubt that anyone will ever see any benefit from this piece of nonsense except of course the airheads in Montpelier.

[Jerome Coleman]

I thought Tom was smarter than this,after all, he's my age.!!!This dog and pony show of getting people to do their laudry at 3 am instead of 6 pm to save energy is a farce.!!! All this does is make people change they're behavior to save money and it sounds good. If enough people do this the power Co's increase their rate during the 3am time. Then when everybody decides to save money the power Co's always propose a rate increase because demand has fallen off. This has been going on since CVPS promoted electric heating for homes in the late 60's and early 70's and is just another waste of the tax payers money.When are peoeple going to wake up.!!!

[Dennis Lukas]

I love the part that private indivduals and rate payers will pay the 68 million needed to complete the poject,raising electric rates.I am sure that this being a well run government program that it will be built at a cost of 100 or 200 million dollars more then estimated further raising electric rates or taxes. I can see the headlines now " Vermont has the highest electrical rates in north america."

[Tom Evslin]

Richard:

Thank you for your kind comment

[Tom Evslin]

Thanks, Mike.

If anyone asked me for a list of Vermonters who have contributed their “skills and talents” to Vermont and understand where we’re going wrong and how to make it right, you’d be way up there.

As you say, past mistakes are no excuse for not building a better future.

[Tom Evslin]

Brattleboro:

Pls see my answers to Dennis and Jerome. This is not about we airheads in Montpelier monitoring anything; it is about utilities making a good business decision to give their customers more choice. They were going to do this anyway; it just would’ve taken longer and the benefits have come later without the stimulus money. The rest of the taxpayers in the country – who are paying for half our project – will benefit from the lessons learned including the mistakes we’re sure to make by going first.

[Tom Evslin]

Jerome:

See my answer to Dennis. This is about much more than peak-shaving although it is a good thing to let those who want to save money do so while preserving all of our right to use expensive peak power so long as we’re willing to pay for it and not “socializing” the extra cost as we do today.

We shouldn’t haven’t backed off of electric storage heat previously. We did so because of a combination of low oil prices, antinuclear feeling, and political correctness. Now that we can mitigate even dynamic peaks with a smart grid, we can get back on track.

[Tom Evslin]

Dennis:

This project is run by the utilities – not the government (although government funding comes with increased reporting and permitting requirements). Ratepayers and investors always pay for utility improvements (sometimes with government help); that’s not new.

Giving electrical consumers information and tools to reduce their costs makes effective rates lower and will be competitive advantage for Vermont. Reduced peak-load as a consequence of consumer choice (not government mandate), will reduce rates even for those who don’t elect to shave peak usage because of less need to build and finance peak capacity.

The biggest benefit, ironically, will be in the opportunity to INCREASE electricity use by substituting clean off peak power from Yankee and HydroQuebec for gasoline and home heating oil.

[Vermont Woodchuck]

This is going to prove to be one more Social Security/Medicare/Medicaid/Prescription plan/Health Care government fixit disaster.
Quickly toss carbon leads over the lines and produce a massive short to ground before this kills another sector of the private economy.

Stupidity is an incurable human condition; those that cannot figure how to save their own money deserve to spend it foolishly. This avoids SPENDING MY MONEY foolishly which the bozos in DC and state capitals have no need of more practice.

Smart grids, smart meters, smart this and that-given the rate of decrease in employment in Vermont, there won't be anyone left to turn on a light.

[Chris Campion]

Tom, to create financial incentives to induce power consumers to use power-intensive appliances only during off-peak hours is the best way to "unhide" costs that are essentially hidden when you charge the same rate 24/7/365. This is also one of the reasons why health care costs run so high - because the costs are set to demand levels that are often larger than they should be, simply because the costs are hidden to the consumer.

[Dennis Lukas]

I still say this is nonsence with huge cost over runs in the future, with the utilities adding another surcharge to the rate payers or the state picking up the tab and taxing every one for this great expereriment that the state of Vermont is the guineapig so we can work the bugs out of the smart grid.This does not solve any imediate problems and posses to creat a new one. The author sites long term goals, sorry the grace period for long term is over, the bills are due now,show me a plan that brings 10,000 good paying private sector jobs to Vermont, and oh by the way if you a manufacturing company hold your breath while we build a smart grid. This another example of if you can't dazzel the with brilliance, baffel them with bull s--t.

[Tom Evslin]

Dennis:

I think the time for thinking short-term only is over. Yes, we have to cut the cost of government now. We also have to build the economic base we need for the future.

[Vermont Woodchuck]

It's also time to stop subsidizing any and every idea that pops up. See how fast the price of everything drops after the deadwood companies go out of business.

Setback thermostats have been selling for years. Smart people took advantage of them without government intervention. Dummies need to get their mellow harshed by experience, not the smothering of the nanny state. Smart meters are no different; if people want them, they'll buy them.

Another layer of bureaucracy, siphoning off 30% of each dollar, won't improve the utilities, the economy or the taxpayer's wallet.
It will get the Union bosses to rally around the fat jowled politicians in Montpelier at election time. SOS!!!

[Daniel Foty]

“When the utilities finish building a smart grid statewide in the next few years, Vermont will have a stronger economy, a better job market, a cleaner environment, better broadband, a lower cost of living, and a stronger tax base to support the cost of government services with lower tax rates than would otherwise be possible.”

It's no joy to point this out, but there is no logical justification for reaching that sort of conclusion. Since it is being made with neither specific citations nor even a cursory quantitative analysis, it seems to fall clearly into what an attorney would judge by "Objection - lacks foundation."

Why will these things happen? How specifically will they happen? From whence will the necessary investment funds come? How will Vermont attract the large inflow of talent that will be necessary for new economic growth?

If we don't enforce rigorous and quantitative thinking about these problems, then we're just setting ourselves up for the latest round of wishful thinking.

To mangle something that Will Rogers once famously said, unbridled wishful-thinking had a great deal to do with getting us into the present mess; it's unlikely that further unbridled wishful thinking will get us back out.

[GreggB]

Green state, E-state, smartgrid- state, etc., peruse Vermont Life from the 1970's and you will find articles claiming how Vermont will seize the future and build industries based around eco-whatever-was-going-to-save-the-world-at-the-time. Vermont has been telling itself it will be a leader in one thing or another for the last 40 years. Funny thing is Vermonters still believe it. Past timme to move out and move on.

[Tom Evslin]

Woodchuck:

A smart meter lets customers avoid dynamic (unscheduled peaks) because it's in real-time communication with the utility. This saving is an important opportunity that hasn't existed up until now and their aren't even yet rates to reflect it.

Utilities actually have enough cost-saving just from avoiding onsite meter reading, from remote turnups and turndowns, and much better outage info for faster repairs to justify the meters. There are not yet accepted general standards for meter communication so the device isn't something we can go buy at Best Buy.

Net: universal installation by the utilities makes sense and would have been done in eight to ten years anyway. The federal money (which is really ours anyway) will let us do the job faster and get the benefits sooner.

[Tom Evslin]

Daniel:

Granted that my post is a lot of top level assertions without backup. However,you shouldn't assume that, because I didn't cite the planning and analysis, it doesn't exist.

I will post more of the planning and reasoning behind the smart grid project in the weeks to come. I don't ask you to believe the assertions without the backup but do ask that you keep an open mind.

[Tom Evslin]

GreggB:

If you want to "move out and move on", that's up to you. I like it here so I'm gonna stay and see if I can help Vermont move on.

[GreggB]

I've already moved on as have many of my friends. I've no doubt you and many others are sincere in trying to help VT. But I've seen enough to know better. VT doesn't have a prosperous future just as Vermont has never had a prosperous past. Seems a disservice to continuously claim the next big thing is right around the corner. Of course those willing/dumb enough to wait might well deserve their fate.

[Dennis Lukas]

I think every one would like to see the real business plan for this smart grid, and you have not addressed the cost over run issue.Your sounding like our other czars in washington.I know our environment friends antennas were raised by "up grading transmission lines".Lets see the business plan,and ALL the companies involved in this.Other wise there is no sustance to any of this technological wonder.