Smart Grid: Confused yet?

Yesterday afternoon, MLGW sent out a news release announcing that we had received a federal grant of over $5 million to bring some Smart Grid enhancements to the downtown and Medical Center areas. This grant was separate from the one that MLGW was seeking in order to install smart meters for a portion of its service territory, and the enhancements that will come from this grant do not include meters. The improvements resulting from this grant include increased monitoring and control of transformers and key circuits that feed downtown and the Medical Center.

Yesterday evening, MLGW was notified that the government had canceled the next phase of accepting applications for additional Smart Grid grants, meaning that MLGW must now reconsider the additional Smart Grid enhancements without federal funding.

Some key facts:

For the Downtown/Med Center Grant:
--MLGW is receiving $5 million in stimulus funds for this project
--This project will give MLGW monitoring and control capabilities for transformers and key circuits that feed the Downtown and Med Center area and help us improve reliability and response times for certain situations
--The improvements will give MLGW additional insight into potential electric grid problems before outages occur and allow significantly improved analysis to design and troubleshoot the system.
--No smart meter installation is included with this grant.
--No employees will be affected by this grant.
--The total cost of the upgrades is $10.5 million. The grant will cover about half of the cost, with MLGW paying the remaining costs.
--The project is built into the 2010 budget, which does not include any rate increases.

For the Smart Grid grant that we did not receive:
--The federal government has announced that it will no longer accept applications
--The government has awarded all of its stimulus funds for Smart Grid enhancements
--At this point, MLGW must analyze its Smart Grid possibilities without federal funding.

From today's Commercial Appeal:

MLGW's smart grid in doubt
Federal funding that utility was to use has been depleted, officials learn

The federal government has informed Memphis Light, Gas and Water Division that it has spent all the money in a key grant program, a disclosure that raises questions about the future of MLGW's "smart grid" plan, a utility spokesman said.

MLGW had planned to use federal grants and its own funds to purchase sophisticated in-home meters and other equipment in six Memphis ZIP codes: 38104, 38106, 38108, 38111, 38114 and 38122.

Some residents would receive digital displays that show them exactly how much energy they're using, or they could get the data through the Internet.

MLGW was in the process of collecting and reviewing plans submitted by interested contractors. But Tuesday's news may change those plans.

"At this point, we're going to have to sit down and look at what our next step is," MLGW spokesman Glen Thomas said.

The utility's 2010 budget included a total of $13.8 million for the project, with $6.8 million reimbursed through a federal grant.

The total cost of implementing the project throughout the area would be much greater. MLGW hasn't attempted to calculate the cost since 2006, when it concluded that $119 million would be needed just to replace all meters.

The smart-grid program has faced opposition from the International Brotherhood of Electrical Workers labor union, which complained of higher costs and potential job losses for meter-readers and others.

Union representative Bill Hawkins wasn't available Tuesday afternoon.

News that the federal grant program had ended came on the same day that MLGW announced it had won $5 million through a related grant program.

It plans to use the money for new equipment to monitor and control power distribution to Downtown and the Medical Center, Thomas said.

MLGW also plans to put more than $5 million of its own money into the project.

In a smart-grid system, utilities could automatically calculate how much power each customer has used, and perhaps even help the customer find out how much each appliance in the home uses.

The new meters would make it easier for utilities to charge customers different rates at different times, a step that would reduce the need for power plants that only switch on at peak demand.

In the far future, customers might even use batteries to store electricity at "cheap" night rates and resell the energy to suppliers at higher day rates.

At a meeting between City Council members and MLGW officials Tuesday, City Council chairman Harold Collins said he expects his colleagues will want to know more when the utility asks the council to approve its 2010 budget.

"I think there will be some serious questions about the smart-grid issue, how it will affect people in those ZIP codes," he said.