Project Management
Resume:
Salt River Project:
Delivering Leadership on
Smarter Technology & Rates
Institute for Energy and the Environment
Vermont Law School
The Institute for Energy and
the Environment (IEE) is a
national and international
resource for energy law and
policy. The institute offers a
full course curriculum and a
certificate of concentration
during the academic year and
through its Energy Summer seminars; distributes scholarly,
technical, and practical publications; provides forums and
conferences for professional education and issue development;
and serves as a center for graduate research on energy issues,
with an environmental awareness.
The institute s research team is selected from top students in the
energy and environmental programs at Vermont Law School. IEE
student researchers work on some of the most pressing energy
concerns the world faces today, including energy self reliance,
the Smart Grid, energy security and justice, carbon sequestration,
and renewable energy sources. More information about IEE can
be found at www.vermontlaw.edu/energy
Smart Grid Case Study Series Case 2
June 2012
T ABLE OF CONTENTS
Smart Grid Project Overview 1
The Smart Grid Case Studies Series 1
Project Focus 2012 and Beyond 1
Introduction 2
Background of Salt River Project 2
Overview of SRP s Smart Grid Program 4
Broad Perspectives 4
Program Management and Development 6
SRP s Smart Grid Roadmap: Seven Key Initiatives 7
Cyber Security 7
WAN Monitoring 8
Integrated Substation Local Area Networks (LAN) 8
Unified Communications 9
Distribution Feeder Automation 10
Electric System Data Acquisition and Management 12
Enterprise Application Integration 12
Smart Meters and AMI 13
DOE/ARRA Smart Grid Investment Grant 13
AMI Communications Network 14
Cost Savings 16
Dynamic Pricing 16
Time of Use Rates 16
EZ-3 Rates 17
M-Power 18
Demand Response 22
Electric Vehicle Integration 23
Implementation Issues 23
Observations and Conclusion 25
US Department of Energy Acknowledgment and Disclaimer 28
SMART GRID PROJECT OVERVIEW
The United States electric transmission and distribution system is on the
verge of a transformation to a smart electric grid. At the center of this
evolution is the introduction of new technology at the customer meter
as well as the distribution and transmission system level.
Unsurprisingly, the introduction of this new technology has presented
new legal, policy, and regulatory challenges for state and federal
regulators. The federal government has added additional momentum to
this technological evolution by making a smart electric grid a central component of the US clean energy
agenda and awarding $3.4 billion in Smart Grid investment grants to utilities and other entities as part of
the American Recovery and Reinvestment Act.
THE SMART GRID CASE STUDIES SERIES
Vermont Law School s Institute for Energy and the Environment Smart Grid Project was initiated in 2010
through joint funding of the United States Department of Energy, with the support of Vermont
Congressman Peter Welch, and Vermont Law
School. Utilizing case study analysis of Smart Grid
Our Smart Grid Case Study Series Includes:
program implementation, the research project is
examining the question: what legal, regulatory,
Central Vermont Public Service
and other policy changes can best ensure that (Vermont)
Smart Grid implementation in the U.S. improves Commonwealth Edison (Illinois)
reliability, enhances consumer value, and meets Pecan Street Project (Texas)
Sacramento Municipal Utility District
our clean energy goals?
(California)
Salt River Project (Arizona)
PROJECT FOCUS 2012 AND BEYOND
San Diego Gas and Electric (California)
FERC Chairman John Wellinghoff has noted that
climate change and a smart electric grid are both
key issues for the energy industry and the federal government, but rarely are these two issues linked in
policy debates. The focus of the Institute for Energy and Environment s Smart Grid Project is to help better
define this important link, and to promote smart policies that benefit both the climate and the electric grid.
Research such as that conducted by Pacific Northwest National Laboratory (PNNL) and the Electric Power
Research Institute have identified that a smarter grid is likely to be a significantly greener grid, which could
lead to significant reductions in both energy usage and carbon emissions. PNNL s research suggests that a
Smart Grid can lead to a 12% reduction in carbon emissions alone by 2030. Building on our case study
research during the second phase of our project, we are producing up to five Smart Grid policy reports.
These reports will examine best practices, lessons learned, and policy issues related to:
Legal and regulatory challenges to Smart Grid implementation, including customer data privacy;
Integration of electric vehicles into the grid;
Supercharging efficiency and expanding demand response;
Integration of clean distributed generation and storage; and
Distribution optimization and conservation voltage reduction.
More about the Institute s Smart Grid Project is available at: www.vermontlaw.edu/smartgrid
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I NTRODUCTION
As utilities across the country are deploying smart meters,
rolling out miles of fiber, and grappling with cyber security and data
management challenges, Smart Grid is the ultimate buzz word in the industry. Yet providing an exact explanation of what
the Smart Grid is made of, what it can do, and what benefits it will bring is illusive.1 For the Salt River Project ( SRP ) in
the greater Phoenix, Arizona area, the Smart Grid is nothing new. Noted by smartgridnews.com, SRP has been investing in
Smart Grid technologies before the term Smart Grid became an industry buzz word.2
This paper presents a case study of SRP s Smart Grid programs. The impetus for this study was SRP s award of a
$56.9 million investment grant to expand its smart meter network awarded by the Department of Energy through the
American Reinvestment and Recovery Act. However, SRP s Smart Grid investments reach far beyond customer-centered
smart meter applications. SRP s unique governance and regulatory structure has allowed it to focus on essential Smart Grid
backbone infrastructure supporting the full spectrum of its power system.
B ACKGROUND OF SALT RIVER PROJECT
The Salt River Project is the third largest public power entity in the United States, serving approximately 940,000
customers in Arizona.3 SRP s unique history and governance structure plays an important role in its investment and strategic
operations. Originally founded in 1903 through the National Reclamation Act of 1902,4 SRP is comprised of two entities; the
Salt River Valley Water User s Association, a private corporation that supplies water and manages water rights, and the Salt
River Project Agricultural Improvement and Power District which is a political subdivision of the state. The Salt River
1
M. Granger Morgan, et al, The Many Meanings of Smart Grid, Carnegie Mellon University Department of Engineering
and Public Policy (July 2009).
2
SmartGridNews, Salt River Project Profile (2011),
http://www.smartgridnews.com/artman/publish/Key_Players_Utilities/Salt_River_Project_Profile-1095.html (last visited
May 11, 2011).
3
Id.
4
Salt River Project, Building a Legacy: The Story of SRP, 12, 2006.
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Project Improvement and Power District, now simply referred to as the Salt River Project, was formed in 1937 to operate
power generation and distribution systems and meet the expanding power needs of the area.5
As a political subdivision of the State of Arizona, SRP is not subject to regulation by the Arizona Corporation
Commission (ACC) in the same manner that investor owned utilities are.6 Rates, investments, and day-to-day activities of
SRP do not require ACC approval. SRP is only subject to ACC regulation for approval of generation projects over 100 MW
or transmission projects over 115kV.
Instead, SRP is governed by landowners within its service territory through elections of Board and Council
members.7 The Board sets specific policy objectives and works with Officers and executive management members to operate
SRP,8 while the Council is responsible for broader policies and communication with constituents.9 In many ways, being free
from ACC regulation allows SRP to operate with more flexibility. As discussed below, this structure has proved
advantageous in SRP s Smart Grid investments.
SRP is an integrated utility with ownership interests in generation as well as being responsible for transmission and
distribution services.10 SRP has 8,094 MW available to serve peak demand, and reported annual total sales of 33,064 GWh
in 2009.11 SRP has full or partial ownership interest in natural gas and coal fired plants, one nuclear facility, and 493 MW of
renewable power.12 Hydro facilities compose 57% of SRP s renewable resources, or 383 MW.13 SRP also owns over 1,500
5
Salt River Project, A History of the Salt River Project, http://www.srpnet.com/about/history/legacy.aspx (last visited May
11, 2011).
6
The ACC is similar to Public Utility Commissions or Public Service Commissions in other states, except that the ACC also
has authority of corporations, securities regulation, and railroad/pipeline safety. See
http://www.azcc.gov/Divisions/Administration/about.asp.
7
SRP Elected Officials, http://www.srpnet.com/about/elected.aspx (last visited May 11, 2011).
8
The Board is composed of ten district representatives and four at-large members. District representatives are elected by
acreage-based voting system. This acreage-based system dates back to the origination of SRP when landowners pledged
private property for collateral on government loans. The system has been upheld by the Supreme Court in 1981. At-large
members have a one-landowner, one-vote system. See http://www.srpnet.com/about/governing.aspx#district; and Salt River
Project, Building a Legacy: The Story of SRP, 8, 2006.
9
SRP Governance, http://www.srpnet.com/about/governing.aspx#district (last visited May 11, 2011).
10
Salt River Project, Building a Legacy: The Story of SRP, 8, 2006.
11
Facts About SRP, http://www.srpnet.com/about/facts.aspx (last visited May 11, 2011).
12
Id.
13
Renewable Energy, http://www.srpnet.com/environment/renewable.aspx (last visited May 11, 2011).
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miles of transmission lines and 1,400 miles of fiber optic lines.14 SRP recognizes that improving efficiencies in its systems
through Smart Grid technologies can help lower costs and improve reliability while continuing to meet the modern energy
challenges of a rapidly growing metropolitan area.
O VERVIEW OF SRP S SMART GRID PROGRAM
B ROAD PERSPECTIVES
The Energy Independence and Security Act of 2007 established new standards under Section 111(d) of the Public
Utilities Regulatory Policy Act (PURPA). One of those new PURPA standards required utilities to consider investments in
Smart Grid systems based on cost effectiveness, improved reliability, security, system performance, and societal benefits.15
SRP s Board adopted the new PURPA standard in full with the exception of Section 16B Rate Recovery and 16C Obsolete
Equipment. These two sections were not applicable to SRP because they refer to each State making a policy determination
about these topics. These standards relate largely to investments in non-advanced technologies.
SRP has been working in the Smart Grid arena for several years prior to the new standards developed in the EISA.
The company began installing fiber optics in the late 1990 s and has now connected over 98% of substations with fiber
optics, began deploying smart meters as early as 2003, and has been offering time of use rates for decades.16 SRP is currently
investing in Smart Grid technologies for all aspects of its power system. In doing so, SRP is focused on building out the
backbone of a Smart Grid system to support all components of the Smart Grid and ensure interoperability with future
technologies.
For SRP, investing in the Smart Grid at this stage requires expanding infrastructure in three key areas. First,
communications systems at the transmission level must be enhanced. Enhanced systems begin with SRP s fiber network but
extend to mobile communications, system automation, and network controls. Second, SRP is investing in IT infrastructure.
According to Joe Nowaczyk, Manager of Electronic Systems at SRP, much of the Smart Grid requires linking information
technology with operations technology. A successful Smart Grid IT infrastructure requires unified communications to
efficiently manage and utilize data across multiple Smart Grid components and corporate departments. Finally, SRP is
14
SmartGridNews, Salt River Project Profile (2011),
http://www.smartgridnews.com/artman/publish/Key_Players_Utilities/Salt_River_Project_Profile-1095.html (last visited
May 11, 2011).
15
16 U.S.C. 2621(d) (2010).
16
Phone interview with Joe Nowaczyk, Dec. 6, 2010.
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working to develop an enterprise strategy for Smart Grid cyber security. As the grid becomes intertwined with more data and
communications technology, it is essential that information is managed securely.
SRP s ability to focus on these fundamental pieces of Smart Grid infrastructure is in part due to its unique self-
regulated structure. As a political subdivision of the State, SRP is not subject to ACC approval for its investments nor
required to submit regulatory filings or demonstrate immediate benefits from Smart Grid infrastructure. Therefore, SRP only
needed internal approval to begin investing in backbone communications infrastructure. While immediate reliability benefits
of backbone infrastructure investments are often difficult to quantify, they are fundamental investments that will help ready
SRP for future Smart Grid technologies. Other utilities across the country remain focused on consumer-centered
technologies such as smart meters and advanced meter infrastructure ( AMI ) because they are commonly thought to provide
the most immediate benefits. Yet some utilities are still encountering regulatory hurdles. Anecdotally, Baltimore Gas &
Electric s original proposal to install 1.2 million smart meters was denied by the Maryland Public Service Commission in
June of 2010, threatening the company s eligibility for DOE funding.17 While BGE s plan was conditionally approved on
resubmission,18 this exemplifies the type of regulatory hurdles that SRP does not have to face. Certainly SRP is subject to
internal review from its Board and Council, but this process is easily contrasted with the review of a Public Service
Commission.
Focusing on the Smart Grid backbone is not to say that SRP is unconcerned with consumer benefits or measuring
system improvements. In fact, SRP began installing advanced meters in 2003, and with the help of a DOE grant SRP plans
to reach 100% installation of smart meters in its service territory by 2013. The key point is that SRP s core Smart Grid
investments reach far beyond smart meters. Before realizing the full potential of end-user benefits, utilities must start with
the backbone of a Smart Grid system and gain benefits on the utility side.19 To that end, SRP developed seven key initiatives
in 2009. These areas include the following:20
17
The plan was primarily rejected because the Maryland PSC would not approve a cost recovery customer surcharge, would
not impose mandatory time of use rates, was concerned with educational components of the plan, and did not want customers
to face the full economic risk of smart meter technology. Maryland Public Service Commission Order No. 83410 2-3, June
21, 2010; see also http://www.greentechmedia.com/articles/read/baltimore-gas-electrics-smart-meter-plan-is-rejected/.
18
Maryland Public Service Commission Order No. 83531, August 13, 2010.
19
Butler, Frederick. A Call to Order: A Regulatory Perspective on the Smart Grid. IEEE Power & Energy
Magazine, March/April 2009, Pages 16-25, 93.
20
Joe Nowaczyk, presentation of SRP Smart Grid Roadmap Validation Review, April 8, 2009 [hereafter Smart Grid
Roadmap].
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Improve existing Cyber Security strategies
Implement automated tools for WAN Monitoring
Create and deploy an Integrated Substation LAN strategy
Utilize a single Unified Communications infrastructure for field devices
Expand the deployment of Distribution Feeder Automation
Deploy an Electrical System Data Acquisition and Management for automation and analysis
Implement an integration bus for secure Enterprise Application Integration between applications and
databases
Each of these areas fit within the three key elements discussed above of communications systems, IT infrastructure, and
cyber security. There are also synergies across these seven areas that, to the extent possible, SRP is attempting to take
advantage of. A brief synopsis of these seven initiatives is provided in section II.C., below.
P ROGRAM MANAGEMENT AND DEVELOPMENT
SRP has been integrally involved in the Electric Power Research Institute s ( EPRI ) Smart Grid initiatives. SRP is
a participating utility and original funder of EPRI s Intelligrid program, 21 a collaborating utility in the Smart Grid
Demonstration Initiative, 22 and a participant in the Green Circuits Initiative. 23 SRP retained EPRI in 2008 for the
development of case studies about the use of Smart Grid technology and assistance developing a Smart Grid Roadmap.24
SRP obtained executive staff approval of its Smart Grid Roadmap in July of 2008.25 The Roadmap identifies the
seven key areas discussed above. It also adopted four guiding principles; leveraging investments, integrating technology,
developing open standards and protocols, and engaging industry efforts.26 Management teams were created at two levels. A
Smart Grid Leadership Team was appointed to promote the guiding principles,27 and seven cross-functional teams were
21
IntelliGrid seeks to link the communications and safety systems of modern grids together to create a central management
system for a quicker healing grid. Smart Grid Newsletter, The Case for Use Cases, 2006 available at
http://intelligrid.epri.com/docs/SRP_use_cases.pdf.
22
Electric Power Research Institute, EPRI Smart Grid Demonstration Initiative Two Year Update, 2010.
23
Transmission and Distribution World, EPRI Green Circuits Project Launched (May 1, 2010)
http://tdworld.com/overhead_distribution/epri-green-circuits-project/.
24
Salt River Project presentation to the National Science and Technology Council Subcommittee on Smart Grid, August 23,
2010.
25
Id.
26
Id.
27
Id.
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created in September 2008 to evaluate each of the seven initiatives. 28 The leadership team has representatives and
participation from ten different SRP departments.29
SRP s Smart Grid Vision is to develop a power delivery infrastructure that enables practical integration of
advances in communications, computing, and electronics to optimize system reliability, contain costs, and accommodate the
delivery of services to meet the future needs of [SRP] customers. 30 SRP s Mission Statement is to plan and deploy a
well coordinated, interoperable, cost-effective corporate infrastructure that will enable the development, integration and
application of new technologies throughout SRP that provide secure, high-quality, cost effective, reliable services both
internally and externally. 31
S RP S SMART GRID ROADMAP: SEVEN KEY INITIATIVES
C YBER SECURITY
The goal of SRP s cyber security initiative is to develop a secure infrastructure spanning from technology platforms
to policies, procedures and employee culture to meet information requirements in a secure manner.32 SRP identifies cyber
security as a high-impact but relatively easy initiative to begin to implement. Though the initiative was one of the first to
begin, SRP understands that a comprehensive enterprise-wide cyber security implementation will be difficult and take years
to fully develop. To date, SRP has completed development of an enterprise strategy for cyber security and goals for FY 2011
are centered on implementation of that strategy.33
SRP s security model includes both preventive and reactive measures. The model covers risk management,
standards compliance, incident management, and security operations. 34 In addition to compliance with NERC Critical
Infrastructure Protection standards ( CIP ), SRP s enterprise cyber security plan is modeled after two National Institute of
Standards and Technology ( NIST ) standards. NIST 800-37, Guide for applying the risk management framework to federal
28
Smart Grid Roadmap, supra note 20.
29
Joe Nowaczyk, presentation of SRP Smart Grid Implementation, Dec. 15, 2009.
30
Smart Grid Roadmap, supra note 20.
31
Joe Nowaczyk, presentation of SRP Smart Grid Implementation, Dec. 15, 2009.
32
Smart Grid Roadmap, supra note 20.
33
Phone interview with Jeff Younger, Feb. 21, 2011.
34
Smart Grid Roadmap, supra note 20.
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information systems assisted the development of preventative security protocols. NIST 800-53, Recommended security
controls for federal information systems and organizations guided SRP in developing its enterprise security control
framework.35
While SRP is moving forward with cyber security standards, challenges still persist. SRP notes that NIST standards
should be developed before NERC CIP standards to ensure consistency between industry standards and regulatory
requirements that could produce significant penalties.36 SRP also notes that like much of the industry, it is still struggling
with the issue of consumer privacy.37 One key may be to physically separate networks for certain types of data in order to
control a secure perimeter for that data.38
W AN MONITORING
WAN Monitoring, or Wide Area Network monitoring, refers to managing the growing network of data associated
with Smart Grid developments. SRP is looking for ways to integrate advances in communications and IT technology with
the physical electric system. SRP visited Network Operations Centers at two utilities, Arizona Public Service and Southern
California Edison and one telecom utility, Calence, to assess the tools others were using to manage their communication
networks.
Recognizing there was an immediate need for additional monitoring tools, SRP worked with existing vendors to
expand monitoring capability.39 SRP has recently developed a communication network operating center to allow for more
robust monitoring of SRP s extensive communication network.40
I NTEGRATED SUBSTATION LOCAL AREA NETWORKS (LAN)
Advanced communications inside the fence of a substation can help to provide system operators with fast and
reliable event data.41 When SRP first evaluated this topic in 2009, EPRI assessments stated several benefits from fully
35
Salt River Project presentation to the National Science and Technology Council Subcommittee on Smart Grid, August 23,
2010; Phone interview with Jeff Younger, Feb. 21, 2011.
36
Id.
37
Phone interview with Joe Nowaczyk, Dec. 6, 2010.
38
Id.
39
Phone interview with Jeff Younger, Feb. 21, 2011.
40
Id.
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integrated substation LANs. However, surveys of other utility experiences showed almost no U.S. participation with the
most current International Electrotechnical Commission (IEC) 61850 standard42 and mixed results from other automation
experiences.43 SRP recommended pursuing an implementation strategy including further research and expanded funds to
accelerate a lab pilot study.44 Some utilities are adopting IEC 61850 as the standard design for substation automation in
newly constructed substations. However, SRP is currently monitoring the maturity of this technology for consideration of
use in future substations, but has no plans at this time to deploy it.45 SRP currently uses DNP3/IP IEEE approved protocol.
U NIFIED COMMUNICATIONS
The unified communications initiative essentially refers to creating and managing the telecommunications
infrastructure that will support and integrate SRP s Smart Grid activities.46 SRP considered this initiative to have the highest
impact but to be moderately challenging to achieve. Main challenges include connecting various applications already using
field communications with new systems, anticipating future automation needs, and determining what physical technology has
the best business case in each application. The SRP communications functional team divided its challenges into three areas:
communications infrastructure, AMI and the Smart Grid, and enterprise planning and collaboration.47
The purpose of building out communications infrastructure is to eventually unify the various systems so that
multiple Smart Grid functions can work seamlessly together. For instance, one potential long term goal is to connect the
AMI infrastructure with distribution feeder automation ( DFA ) infrastructure. This would improve outage management by
allowing individual customer data from smart meters to alert system operators about faults or voltage problems on the
distribution system and link automated system responses to reroute power and pinpoint outage locations for more efficient
crew utilization and reduced restoration time. However, achieving this link is not realistic in the short term because of
bandwidth issues, Supervisory Control and Data Acquisition (SCADA) requirements, intelligent distribution devices and
41
Smart Grid Roadmap, supra note 20.
42
IEC 61850 is the International Electrotechnical Commission standard design for substation automation. See,
http://seclab.uiuc.edu/docs/iec61850-intro.pdf.
43
Smart Grid Roadmap, supra note 20.
44
Id.
45
Phone interview with Jeff Younger, Feb. 21, 2011.
46
SRP Smart Grid Roadmap, supra note 20.
47
Id.
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AMI/DFA architecture.48 In short, smart meter data is downloaded once every 24 hours through the AMI infrastructure,
while SCADA operates by pinging substations once every four cycles (referring to the AC voltage cycle, for which there are
60 every second) and intelligent devices such as IntelliruptorsTM, digital fault recorders and automated capacitor controllers
all currently use varying methods of communications. Since every smart meter collects data on 50 different types of
information, and there will eventually be over 900,000 smart meters on SRP s system, there is simply not enough capacity
with the existing communication systems in place to run both AMI and DFA together. Essentially, this is a problem of
latency and bandwidth limitations due to the amount of data and existing communication infrastructure of the two systems.
SRP is currently reviewing multiple communication options to determine the best solutions to address these issues.49
Establishing the proper AMI is essential to SRP s, or any utility s, success with the Smart Grid. AMI supports
meter to bill information management, and it is the precursor to many benefits including outage management, system
automation, and residential demand response. SRP has undertaken significant research to anticipate future needs as AMI is
expanded. More detail regarding the AMI infrastructure is included in section II.D., below.
In sum, creating solutions for unified communications systems will support almost all aspects of the Smart Grid.
While challenges still exist, SRP recognizes that successful implementation of AMI and integration via Meter Data
Management system is fundamental to enabling the Smart Grid of the future. 50 Furthermore, collaboration between
departments and effective planning will be critical to maximize returns on investments.51
D ISTRIBUTION FEEDER AUTOMATION
SRP already has 15 years of experience with automation and has over 179 automated switches throughout its
system.52 As SRP expands DFA and creates guidelines and policies, it plans to take advantage of existing designs that
already allow flexibility.53
48
Id.
49
Interview with Joe Nowaczyk and Jeff Younger, March 21, 2011.
50
SRP Smart Grid Roadmap, supra note 20.
51
Id.
52
Presentation to National Science and Technology Council Subcommittee on Smart Grid, Aug. 23, 2010.
53
Smart Grid Roadmap, supra note 20.
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When EPRI made recommendations for increasing efficiencies, improving reliability, and incorporating green
practices during its Green Circuits initiative, SRP had already implemented much of what EPRI recommended.54 SRP was
already purchasing the most efficient transformers, and had shorter feeders in the range of 3 to 10 miles which helps reduce
inefficiencies.55 EPRI s modeling of four SRP circuits indicated a potential 2% energy savings across the system. SRP then
ran a field study in the summer of 2010 to test whether these modeled results could be achieved. SRP s field study is
currently being evaluated to determine if EPRI s 2% energy savings across the system is achievable. If field results verify
the modeled results, then a full cost/benefit analysis will be run. However, to realize the full potential benefits of energy
reduction, communication and automation between meters, capacitor controllers, load tap changes and possibly inverters
would need to be developed along with the applications to analyze and make the automated system decisions.56 Large scale
penetration of distributed renewable energy may require the same type of communication, automation and applications to
ensure reliability of the distribution system.
With reference to future DFA initiatives, SRP is considering several implementation plans. These include
expanding on existing concepts, linking fiber hot spots with DFA, remotely controlling future distributed generation projects,
integrating PHEVs, automating capacitor controls and fault location, and controlling demand response.57 SRP has broken
these segments out as near-term opportunities and long-term opportunities as well as estimating build-out costs for each
segment.58 SRP continues to study new opportunities in these areas.
At this stage, SRP is deploying feeder automation technology strategically. Upgrades are focused in specific areas
with reliability issues; SRP is taking a geo-targeted approach.59 SRP also offers optional enhanced service agreements for
some commercial and industrial customers to achieve a higher level of reliability. These are customers that demand
54
Interview with Joe Nowaczyk and Jeff Younger, March 21, 2011.
55
Id.
56
Id.
57
Smart Grid Roadmap, supra note 20.
58
Id.
59
Interview with Joe Nowaczyk and Jeff Younger, March 21, 2011.
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continuous power service for their operations, such as data processing centers, chip manufacturers, and hospitals. Automated
switches are placed on their feeders to decrease the probability of any potential outages to near zero.60
E LECTRIC SYSTEM DATA ACQUISITION AND MANAGEMENT
The immense increase in automated processes and data gathering associated with Smart Grid activities creates a
significant data management problem. The data acquisition and management initiative seeks to support the Smart Grid by
developing a system to collect, manage, and utilize information across various systems.61 Data management will help to
improve operational efficiency, mainly in more technical system operations areas. Data acquisition plans are aimed at all
intelligent devices located within SRP s electric and water system.62 Ultimately, these systems will help to enhance grid
efficiencies, operations, maintenance, and diagnostics.
Implementing these systems within the IT department presents an enormous challenge. SRP is in the early stages of
implementation, and the full process will require a high degree of personnel development to familiarize IT staff with the
intelligent devices. IT staff must be familiar with the types of data each device sends, where it sends the data, how the data is
formatted, how the data is currently used and who else within the company might be able to utilize this data. SRP must also
overcome challenges related to storing this data for enterprise access, securing it, and determining who will have ownership
of the information.
E NTERPRISE APPLICATION INTEGRATION
Integrating applications will allow Smart Grid data to benefit the full range of SRP s system. It requires linking the
masses of data with the back-office functions that need, or could benefit from, accessing that information. SRP ranks this
initiative as the most difficult and highest impact out of all seven initiatives.63 Currently, SRP describes the system of data
sharing as spaghetti, because many different corporate divisions that need to use this data. Corporate IT, transmission and
generation, distribution operations, power generation, and customer services departments all need access to Smart Grid
systems information.
60
Id.
61
Smart Grid Roadmap, supra note 20.
62
Id.
63
Id.
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SRP is using the Common Information Model ( CIM ) to make data transferrable between departments.64 A CIM
standardizes data interfaces and allows multiple parties to access and exchange information. SRP is working internally with
its IT department to develop a robust multidisciplinary CIM.
S MART METERS AND AMI
D OE/ARRA SMART GRID INVESTMENT GRANT
In late 2009, SRP was awarded $56.9 million by the Department of Energy ( DOE) from American Reinvestment
and Recovery Act funds to continuing expanding its smart meter infrastructure. 65 The funds are part of the Obama
administration s larger commitment of $3.4 billion in grants for investments in Smart Grid technologies to help improve
efficiency and reliability in the nation s electric grid.66 Prior this award, SRP was well advanced in smart meter installations.
SRP installed its first smart meter in 200367 and reached 54,822 installations by the close of 2006,68 and 374,457 by 2009
when the ARRA funds were awarded.69
The DOE selected SRP for this Smart Grid Investment Grant as one of 100 companies to receive funding for Smart
Grid projects, and one of 31 approved AMI projects.70 SRP is matching the ARRA funds with $57.1 million in its own
funding. SRP will use the bulk of the funds to install 540,000 additional smart meters while a portion will cover software
updates for data management.71 SRP s smart meters are manufactured by the Elster Group, a global manufacturer and leader
in AMI technology.
64
Id.
65
http://www.smartgrid.gov/project/salt-river-project-smart-grid-project.
66
Ryan Randazzo, SRP Gets $56.9M Boost from Feds for Customer Smart Meters' The Arizona Republic, Oct. 27, 2009,
available at http://www.azcentral.com/business/articles/2009/10/27/20091027biz-srp1028.html.
67
http://www.srpnet.com/electric/home/smartmeterfaqs.aspx
68
SRP 2010 Annual Report, 6 (2010).
69
Id.
70
http://www.smartgrid.gov/projects/investment_grant
71
Patrick O Grady, Salt River Project Buys Smart Meters for Stimulus Package, American City Business Journals, May 18,
2010.
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The project, referred to at SRP as Advanced Data Acquisition and Management ( ADAM ), puts SRP on track for
100% deployment of smart meters by 2013 three years ahead of its prior schedule.72 As of April 1, 2011, SRP s website
reported 642,631 meters installed. As reported by Michael Lowe, Manager of Customer Services at SRP, this pace requires
approximately 14,000 meter installations every month by a crew of about 25 employees.73 The ADAM work plan calls for
163,000 meters installed in 2011, 170,000 in 2012, and 145,000 in 2013. Customers cannot request installation, and
customers on SRP s pre-pay program, M-Power (see section II.E., below) will not receive the Elster smart meters.74 Only
customers who opt into SRP s new EZ-3 rate structure (see section II.E., below) can obtain installation outside of SRP s
installation schedule.75
The Investment Grant with DOE is a three year program with two years of subsequent metrics and benefits
reporting.76 SRP negotiated a look back period of 8-9 months to obtain DOE cost sharing for prior investments in AMI
network and smart meter installation.77
A MI COMMUNICATIONS NETWORK
Successfully utilizing these 980,000 smart meters will require a strong communications system connecting the meter
to the back office. Each Elster meter collects over 50 data points every 15 minutes which are downloaded nightly by SRP.
To collect this massive amount of data, SRP relies on GPRS wireless communications between the Radio Frequency Mesh
endpoints and other field deployed Smart Grid devices.
SRP deployed its backhaul wireless communication network and infrastructure well in advance of receiving the
DOE grant, and before beginning wide-scale installation of smart meters.78 The RF Mesh network transmits smart meter data
72
SRP 2010 Annual Report, 6 (2010).
73
Patrick O Grady, Salt River Project Buys Smart Meters for Stimulus Package, American City Business Journals, May 18,
2010.
74
http://www.srpnet.com/electric/home/smartmeterfaqs.aspx.
75
Id.
76
Interview with Scott Trout, March 21, 2011.
77
Id.
78
Id.
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from the home over a 900MHz unlicensed network to collector meters.79 SRP then transmits the meter data from the
collector meters over the GPRS wireless and Public Switched Telephone Network (PSTN) to SRP s office.80 SRP is
considering transitioning the PSTN communication network to a more advanced wireless (CDMA) communication network,
which will also provide redundancy. SRP is currently reviewing multiple communication options to identify the best
solutions to meet the needs of SRP and its customers.81
Once data reaches SRP offices, it enters SRP s meter data management system ( MDM ). SRP has recognized that
developing a successful MDM system is critical to fulfilling the potential of smart meters to provide services such as outage
management, demand response, voltage verification, load profiling, and customer services.82 SRP is working with
EnergyICT, a division of Elster, to help develop an MDM system.83 One major challenge facing SRP s MDM system is the
ability to share data across different corporate departments. When SRP s IT department conducted an initial survey and
study, thirty-two different organizations within SRP expressed interest in utilizing varying data elements attainable from
smart meters for various analysis and services.84 SRP developed a prioritization matrix based on these results. Yet for the
time being, the key priority is meter to bill data, giving the customer service and billing departments first access to the
advanced MDM system. Along with its early experience with smart meters, SRP has been dealing with back-office meter
data for years.85 The IT department first internally developed an application to link smart meter data with SRP s billing
system.86 As the MDM system advances, SRP will use meter data in operations to aide outage management then it will begin
linking with other management systems according to the prioritization matrix.87 This phase of the project will begin after the
DOE grant closes in 2013.
79
Smart Grid Roadmap, supra note 20.
80
Id.
81
Interview with Joe Nowaczyk and Jeff Younger, March 21, 2011.
82
Smart Grid Roadmap, supra note 20.
83
Interview with Scott Trout, March 21, 2011.
84
Phone interview with Jeff Younger, Feb. 21, 2011.
85
Michael T. Burr, Middleware Mashup: Smart Grid and the Back Office, 145 NO. 5 PUB. UTIL. FORT. 65, 3 (2007).
86
Id.
87
Phone interview with Jeff Younger, Feb. 21, 2011.
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For now, the AMI and MDM systems are linking smart meters in the home with SRP s back office, enhancing
billing practices, and empowering customers with information. After data is received in SRP s MDM system, customers can
access data about their daily usage through the My Account application on SRP s website. SRP expects to support hourly
usage information in the near future, but does not currently support in-home displays or PC applications.88
C OST SAVINGS
SRP s smart meters have no net cost to the customer. The benefits of automated meter reading are more than
covering the costs of upgraded service. As of March 2011 SRP has remotely addressed over 1.2 million service orders, saved
over 401,000 labor hours, avoided 2.0 million driving miles, and conserved 198,000 gallons of fuel.
D YNAMIC PRICING
SRP offers customers four price plans to choose from. They include a basic plan with seasonal rates, a time of use
(TOU) plan, an EZ-3 plan offering time of use rates with a shorter peak period, and M-Power SRP s unique pre-pay plan.
SRP s basic plan uses seasonal rates with an inclining block rate above high usage levels.89 The E-26 time of use rate has
been offered for over 20 years, but has been selected by more customers as smart meters become available. EZ-3 is a newly
introduced time of use rate which requires installation of a smart meter to enroll. SRP s M-Power program is the nation s
largest pre-pay electricity program with over 100,000 customers enrolled, leaving many utilities looking to SRP as a pre-pay
success story. SRP s dynamic pricing programs are all voluntary, opt-in programs.
T IME OF USE RATES
SRP s standard time of use rate, E-26, charges higher peak prices during 1pm to 8pm from May through October,
and from 5am to 9am and 5pm to 9pm during November through April.90 On-peak pricing varies throughout the seasons.
Pricing information available through smart meters along with more accurate metering offers consumers the opportunity to
save more with TOU pricing. Since the advanced rollout of smart meters, SRP has seen a 20 % increase in voluntary TOU
88
http://www.srpnet.com/electric/home/smartmeterfaqs.aspx#7.
89
See http://www.srpnet.com/prices/home/basicfaq.aspx#1 (listing the exact rates of the Basic Plan).
90
SRP, E-26 Standard Price Plan for Residential Time of Use Service available at
http://www.srpnet.com/prices/pdfx/ResTOU0111.pdf.
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program participation. As of early
2011, SRP had 219,703 customers in
the TOU program. The TOU program
has verified peak load reduction rates
of 95.7 MW in 2010.91
E Z-3 RATES
The EZ-3 rate is a new rate
design that SRP introduced with its
smart meter deployment. In 2010,
6,127 customers were enrolled, but
SRP planned to enroll 36,000
customers in 2011. It is a voluntary rate program, but it requires participating customers to install a smart meter.92 The EZ-3
rate employs a smaller peak price period from 3pm to 6pm Monday through Friday. It also has seasonal prices from May
through October and November to April. The rates in the EZ-3 plan are higher than the TOU plan, significantly so for
summer months.93
The EZ-3 plan was designed to encourage greater amounts of peak shaving with the deployment of smart meters.
According to Scott Trout, manager of the ADAM program, the EZ-3 program has produced measureable savings in peak
demand. SRP reports for 2010 show 9.2 MW in load reduction as a result of the EZ-3 plan, and project 54 MW reduced in
2011 if enrollment increases to the projected level of 36,000 customers. For the program to work well for customers, a
programmable thermostat is essential. Arizona is a summer-peaking state with large air conditioning loads. To account for,
and take advantage of the small peak period in this rate, customers need to pre-cool their home before 3pm, and then raise
their thermostats during the 3pm to 6pm time block.94 On average, customers on this plan use only 10% of their energy
91
Id.
92
Interview with Scott Trout, March 21, 2011.
93
See SRP E-21 Price Plan for Residential Super Peak Time-of-use Service available at
http://www.srpnet.com/prices/pdfx/EZ3Jan2011.pdf.
94
See http://www.srpnet.com/prices/home/ez3faq.aspx#5 (describing how to pre-cool in this program).
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during on-peak hours.. The success of SRP s TOU rates offers evidence that voluntary dynamic pricing programs can attract
participants and reduce peak demand.
M -POWER
SRP has the largest pre-pay electric
service program in the nation serving over
100,000 customers.95 The program started in
1993 with 100 residential customers and has
grown at a rapid rate.96 Other utilities from
across the country have expressed great
interest in the M-Power program. While the
pre-paid program is not necessarily a full
blown Smart Grid technology, M-Power does
use advanced data and is an excellent
customer behavioral pricing program. By accessing information from an in-home display unit and monitoring spending with
smaller transactions, customers on M-Power have more control of their electric consumption and have reduced their usage by
an average of 12%.
M-Power customers use User Display Terminals ( UDT ) in their homes, corresponding Smart Cards, and 95
PayCenters across the SRP service territory.97 When a customer initiates service under the M-Power program, a technician
installs a new AMPY Landis + Gyr meter which is linked to the UDT and two Smart Cards. The Smart Cards are unique to
the customer s UDT and account; they will not work in another customer s system.98 To add more money to the account, a
customer takes a Smart Card to any SRP PayCenter, inserts the card, and deposits the desired amount of cash (as low as $1)
onto the account. The customer then returns home and inserts the Smart Card into the UDT. The full credit is immediately
transferred through the UDT to the meter and drawn down as the customer continues to use electricity.
Source: SRP
95
Interview with Joe Nowaczyk, Dec. 6, 2010.
96
Scott M. Gawlicki, Got Prepaid? 148 No. 7 PUB. UTIL. FORT. 10, 2 (2010).
97
Paying Upfront: A Review of Salt River Project s M-Power Prepaid Program, 1-2, EPRI, Palo Alto, CA: 2010. 1020260.
98
Id. at 2-2.
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The key to the M-Power system on the customer side of the meter is the UDT. The UDT displays valuable
information, including the following:99
The current rate per hour displayed as dollars/hour, based on the amount of electricity used the previous hour
The rate charged displaying as a kWh rate
Today s cost (estimated)
Yesterday s cost
Cost this month
Cost last month
An estimated number of days of service remaining with the current credit
The remaining credit
The customer can toggle through this array of information on the UDT display. Usage information helps the customer budget
usage and makes the customer very aware of consumption patterns. A customer can plainly see how running the air
conditioner or doing laundry impacts electric usage, and more importantly, the customer s wallet. Of course, the UDT
information is critical to notifying customers when their account balances are low. The UDT gives a beeping signal when the
customer s account balance falls to $10.
On the utility end of the meter, SRP receives usage information through the Smart Card and PayCenters. While the
M-Power meter is similar to a smart meter, it does not provide two-way communication to SRP. Instead, customer
information is transferred from the Smart Card to SRP each time the customer purchases credits at a PayCenter.100 SRP did
not develop this unique M-Power back-office system until 2007.101 Prior to that, SRP merged M-Power customers with their
existing system, generating a monthly bill for record keeping purposes.
Most M-Power customers, save money under the pre-pay program. The most immediate benefit is reduced service
initiation fees. An M-Power system requires a $99 deposit, as compared to the $275 deposit required for traditional
service.102 Additionally, M-Power customers spread their electric payments out throughout the month. Average M-Power
customers deposit credits in the $20 range four times a month in the winter and seven times a month in the summer.103 If a
customer account is drawn to zero, service will be disconnected unless the account reaches zero during the friendly credit
99
Id. at 3-2.
100
Id. at 2-4.
101
Id. 1-4.
102
Id. at 2-1.
103
Id. at 1-3.
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hours of 6pm to 6am. Because M-Power customers are not charged a disconnect or re
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