Concerned stakeholders seek an equitable cost-benefit ratio for all ratepayers.
Sam Sciacca is CEO of SCS Consulting LLC, and is an IEEE senior member and a past member of the IEEE Standards Association Standards Board. He also currently serves as a member of the U.S. National Council of the International Electrotechnical Commission (IEC).
A successful smart grid business case requires utilities to demonstrate to stakeholders that benefits outweigh costs and that there’s a positive return-on-investment (ROI) at the end of the rainbow. A wide diversity of stakeholders means that many see costs, benefits, and ROI from different perspectives, which leads to a sleeper issue that could become a veritable brick wall to some utilities that contemplating smart grid modernization.
Specifically, if utilities can’t make a convincing cost-benefit case for all economic strata of residential ratepayers, then utility regulators, consumer advocates, and ratepayers themselves will increasingly question the value of grid modernization.
With the economics of the DOE Smart Grid Investment Grant projects now coming to light – and in many cases, lacking hard-dollar quantification of benefits – public utility commissions and municipal electric utility departments are grappling with this issue and the notion of equitable costs and benefits for all.
Breaking with the Past
In the past, the cost of improvements to the grid were borne by all residential ratepayers through the imposition of rate increases. This approach served us in the 20th century as it extended and improved electric service to the greatest number of citizens at the lowest possible price.