Trees vs. transmission: Utility arborist group seeks better approach

(Photo by Andrew Malone via Creative Commons)

(Photo by Andrew Malone via Creative Commons)

On Aug. 14, 2003, hot power lines sagged onto overgrown trees in Ohio and triggered the largest blackout in North American history, affecting 50 million people from Michigan to Massachusetts.

One of the main causes, according to the joint U.S.-Canada task force that investigated: the failure of FirstEnergy Corp. to adequately manage tree growth in its transmission right-of-way.

The incident — along with million-dollar-a-day fines subsequently passed by Congress — raised the stakes for tree trimming near transmission lines, and many utilities decided not to take chances.

Utility arborists began observing a trend toward clear cutting and indiscriminate spraying that left nothing in its path, often hurting important habitat and blighting previously green spaces.

A group of utility and conservation groups is now trying to convince the industry to give up the bulldozer approach for a more holistic one known as “integrated vegetation management.”

The Right-of-Way Stewardship Council, also known as ROW Steward, has been developing an accreditation process for utilities that meet certain environmental and community relations standards in their right-of-way management.

Instead of a one-size-cut-it-all approach, accredited utilities are expected to use selective, site-specific treatments that gradually steer vegetation toward lower-growth species.

“You create this lower-growing plant canopy that starts to shade out the tall growing trees. You get the plants that you want helping you achieve your goals,” said Philip Charlton, executive director of the Utility Arborists Association.

The method requires more time upfront in assessing and planning the site, but when successfully executed, nature eventually starts to take over much of the management.

“In the long run, you have lower costs, and at the same time you have all the environmental benefits,” such as less spraying and habitat disruption, Charlton said.

An ‘important part of the ecological fabric’

North American utilities operate approximately 160,000 miles of high-voltage transmission lines, which criss-cross the country in corridors between 100 and 300 feet wide.

The Electric Power Research Institute estimates those utilities also manage approximately 8.6 million acres of land in transmission corridors.

“This is an important part of the ecological fabric in our country,” said Bill Toomey, forest health program director for The Nature Conservancy, one of the stewardship council’s founding members.

Well-managed transmission corridors can provide important habitat and migration paths for birds, mammals and plant species, as well as recreational green space such as bike and walking paths.

Toomey says working with the Right-of-Way Stewardship Council was a natural fit for an organization interested in the health of the nation’s forests. “These folks are touching more trees in the country than any other group.”

One potential benefit of partnering with the utility group, Toomey says, is that utility arborists could help monitor for invasive insects and diseases, one of the biggest threats to forests today.

For utilities, the group behind the accreditation program hopes it can deliver both marketing and regulatory benefits.

“I think it’s huge in terms of public relations and community. Here’s third party proof that we’re doing it the right way,” said Derek Vannice, a vice president with CN Utility Consulting, another of the council’s founding members.

Vannice, the former director of the Utility Arborists Association, also thinks utilities stand to benefit by getting ahead of regulators, which may add rules if current trends continue.

Rewarding best practices

“Every utility claims to be practicing sustainable [integrated vegetation management], but many are not really doing it,” Charlton said. “ROW Steward strives to recognize those that are and educate those that are not.”

Since the 1970s, the approach had been gaining acceptance and becoming more common, but after the 2003 blackout and subsequent regulation, many utilities returned to the “wall-to-wall, everything goes” approach, Charlton said.

The difference can be stark, he said, noting a recent visit to a site where half a transmission corridor was managed by ROW Steward principles and half was not. One side was covered in trees that would require regular trimming, while the other side featured well-established shrubs, flowers and grasses, including threatened and endangered plant species — all compatible with power lines, he said.

The ROW Steward accreditation will be based on standards developed by the Electric Power Research Institute, an independent research group that gets much of its funding from utilities.

Utilities involved so far include FirstEnergy, Chicago-based Exelon, and Pacific Gas & Electric in California. Other ROW Steward members include the Wildlife Habitat Council, Pollinator Partnership, Cornell University, Progressive Solutions, DuPont, SUNY College of Environmental Science and Forestry, BioCompliance Consulting, the Electric Power Research Institute, and the U.S. Environmental Protection Agency.

Earlier this month, the group hired a program administrator, Dovetail Partners, a Minneapolis-based environmental research group.

It’s currently testing its auditing process with three utilities and hopes to roll the accreditation program out more broadly after the pilot phase is completed, likely in November.

Originally published August 19, 2013 at 06:00AM at Midwest Energy News

IBM expert says utilities should become ‘energy malls’

(Photo by Thana Thaweeskulchai via Creative Commons)

(Photo by Thana Thaweeskulchai via Creative Commons)

The solar industry isn’t the only one lining up for a piece of utilities’ lunch.

Cable and telecom companies are increasingly calling on utility customers to pitch home energy management services. Comcast, AT&T and Verizon have all launched products in recent years to help customers track and lower their energy use.

Utilities risk missing out on a potentially important new revenue source if they don’t respond, says IBM utility guru Allan Schurr.

Schurr, IBM’s vice president of energy and utility strategy, spoke last month at a Minnesota rural electric summit, where he urged utilities to think creatively about the role they might play.

A growing market

Home energy management is still a small market, but it’s steadily growing and could help shore up balance sheets as utilities’ traditional business models face mounting pressures, says Schurr.

Navigant Research forecasts that in North America nearly 900,000 customers will subscribe to home energy management services from their broadband provider by the end of the decade.

Home security companies, including ADT and, have also started incorporating home energy management into their product offerings.

Meanwhile, people are adopting new technologies, from solar panels to energy efficient gadgets and appliances, that lower their monthly electric bills — trends that are both projected to accelerate.

“If customers are using less grid power and generating more of their own energy, the electric distribution utilities have to add variety to their service offerings or they become less and less relevant to the typical consumer,” Schurr said in an interview last week.

Schurr sees energy services as a way for utilities to make up some of that lost revenue. His advice: become an “energy mall,” the place where buyers and sellers of any variety of energy products and services go to find one another.

“The energy mall becomes a business strategy for reducing the revenue loss that comes from less energy sales to the end customer,” Schurr said.

How it might work

A utility’s virtual mall would offer customers a variety of energy services, some of which the utility would provide itself and some of which it would offer through partners, which would pay the utility for access to its customers.

Instead of a sunglasses kiosk, think Solar Hut or Smart Meter Shack. Sellers of anything from PV panels to smart outlets might pay the utility to promote its product through bill inserts or call-center scripts, for example.

“In this mall, conceptually, utilities could be the enabler for solar rooftop installations. They could be a financier of those capital investments. They could help design and install upgraded energy using equipment, maybe in a small business scenario,” Schurr said. “They could create information-based products for customers that are trying to do a better job of tracking and budgeting for their energy use.”

“Those are all things that are both differentiating from the standard, one-size-fits-all today, and might generate a revenue stream that replaces electricity sales, which is the way they generate virtually 100 percent of their revenue today,” he said.

Telecom companies take the lead

So far, much of the activity for home and small business energy services has come from companies outside the electric industry.

In late 2011, Verizon became the first major U.S. telecom to launch a connected-home service, selling equipment and a $10 a month service that lets customers monitor and control locks, lights and thermostats.

AT&T announced its Digital Home service earlier this year in 15 markets, including Chicago and St. Louis, including an energy package for $5 a month plus equipment and installations.

This summer, Comcast unveiled a new cloud-based smart thermostat service called EcoSaver and said it would start selling remote-controlled, energy efficient light bulbs.

Time Warner Cable, as well as home security companies ADT, and Vivint have all come out with similar services, too.

“If they are successful, consumers are using less energy, and they’re paying a third party to help them do so,” Schurr said.

Learning to compete

Electric utilities face some competitive disadvantages next to telecom companies. One, the telecoms have more current customers than regional utilities, and two, electric utilities are highly regulated and generally risk-averse — not exactly a recipe for innovation.

“Sometimes these new services are a challenge for utilities who have not been in competitive businesses before,” Schurr said.

That’s why Schurr thinks the energy mall is a useful concept for electric utilities to consider. It doesn’t require them to transform overnight into technology companies.

“It’s not a big investment for them to use what they’re really good at, which is their relationships with their customers, to bring to bear some of these alternative services and generate some revenue,” he said, “in the meantime with a lower investment than if they were trying to organically develop them in-house.”

In his speech in Minnesota last month, Schurr warned that electric utilities could face the same fate as Kodak, which invented the digital camera but didn’t attempt to change its business model until it was too late.

“I would argue that we’ve already seen digital cameras introduced in the form of solar panels and high efficiency equipment,” Schurr said. “Utilities are experts at energy. They know energy services. They know their customers. They can’t wait until it’s too late to take action.”

Originally published August 15, 2013 at 06:00AM at Midwest Energy News

In Michigan, renewables costing utilities less than expected

(Photo by eXtension Farm Energy via Creative Commons)

(Photo by eXtension Farm Energy via Creative Commons)

Consumers Energy encountered two surprises this year after it fast-tracked a Michigan wind farm project to take advantage of expiring federal tax credits.

One, the project will cost less than the utility thought it would to build, and two, technology advances mean each turbine will produce more power than previously projected.

Citing those improved economics, Consumers Energy proposed last week to eliminate a surcharge on customers’ bills that was designed to cover the cost of complying with Michigan’s renewable electricity standard.

The utility is downplaying the significance, but environmental groups are claiming a win, saying the proposal vindicates their position that utilities have exaggerated the cost of renewable energy.

“The accounting is finally catching up to facts we’ve always known, which is that renewable projects have been cost effective, and they’re getting more so,” said David Gard, energy program director for the Michigan Environmental Council.

While it’s difficult to generalize about the rate impact of renewable energy standards, the experience of Michigan’s large utilities suggests they aren’t always as costly as critics claim.

Lower costs

Michigan’s 2008 renewable energy law requires all utilities to generate 10 percent of their electricity from renewables by 2015, and it lets them pass the added expense to customers in the form of a monthly fee.

Consumers Energy had already cut its monthly renewable surcharge in each of the past two years. In 2011, the utility adjusted it from $2.50 to 65 cents, and last year it was lowered again to 52 cents.

On July 29, the company filed testimony with the Michigan Public Service Commission in which it proposed phasing out the renewable energy surcharge completely.

The July 29 filing focuses on financial developments around the company’s Cross Winds Energy Park, a 62-turbine, 105-megawatt wind farm to be built in Tuscola County, in Michigan’s thumb region, south of Saginaw Bay.

Consumers planned to spend approximately $275 million on the project, but the price tag for equipment and construction has since fallen to about $265 million, the company said.

By moving the project schedule up a year, the company will also qualify for approximately $110 million worth of federal wind production tax credits over the next decade.

Meanwhile, the projected net capacity factor — the amount of time the turbines will generate power — has improved from 41 percent to 45.2 percent because of better turbine performance.

The disclosure from Consumers Energy comes just two months after Michigan’s other major electric utility, DTE Energy, proposed lowering its monthly renewable energy surcharge from $3 to 43 cents.

“We’ve experienced lower costs to build our own wind energy parks, as well as for contracts to purchase power,” Irene Dimitry, DTE Energy’s vice president for marketing and renewables, said in a June 4 press release. “Contributing to that have been technology improvements that have led to better wind and solar energy production, as well as federal production tax credits that have offset our costs.”

Vindicating environmentalists?

Michigan environmental groups thought the surcharges were too high from the beginning and are pleased with the utilities’ proposals to significantly lower or eliminate the fees.

“The utilities weren’t excited about having to do renewable energy. They thought it was going to be expensive and didn’t want to have to do more. It turns out, they’re finding that it’s been good business. It’s good for customers, it’s good for the company, and it’s good for investors,” said Tiffany Hartung, a campaign organizer for the Sierra Club’s Michigan chapter.

Dan Bishop, a spokesman for Consumers Energy, rejected that interpretation and instead described the company’s surcharge proposal as primarily an accounting change.

“It isn’t that renewable costs are going away. It is a proposal to simply adjust the billing,” Bishop said. “Our filing is proposing that they no longer be in a separate surcharge.”

Bishop said he could not say whether other portions of customers’ bills would go up or down under the proposal. He also noted that by the end of the year the company will have collected a surplus of about $200 million from the surcharge to cover ongoing compliance costs.

He said technology advances and the federal tax credit help, “but there still is an incremental cost adding renewable energy to your electric supply portfolio, and to claim otherwise, it’s just not accurate.”

Regardless, the shrinking surcharges show the utilities’ projections about what ramping up renewables would cost were also not accurate.

The reality is that the rate impact of renewable electricity standards across the country has been mixed, varying from state to state and utility to utility, but mostly modest.

A 2012 report by the Center for American Progress found that of 22 states where enough data existed, 12 saw electricity prices increase at a slower rate, relative to the national average, after they adopted a renewable standard.

Concludes the report: “There are no data showing that these standards cause electricity rates to skyrocket.”

The Sierra Club and Michigan Environmental Council are members of RE-AMP, which publishes Midwest Energy News.

Originally published August 08, 2013 at 06:00AM at Midwest Energy News

In Wisconsin’s north woods, utility makes case for buried lines

In northern Wisconsin, rugged, forested terrain can make it difficult to access downed power lines. (Photo by Jimmy Emerson via Creative Commons)

In northern Wisconsin, rugged, forested terrain can make it difficult to access downed power lines. (Photo by Jimmy Emerson via Creative Commons)

In parts of northern Wisconsin, it doesn’t take a Hurricane Sandy to knock out power for days.

Garden variety severe thunderstorms routinely leave thousands of customers without electricity in the state’s densely forested northeast corner.

Utility officials hope burying more than 1,000 miles of power lines might bring some relief to customers who are sick of resetting flashing alarm clocks.

Wisconsin Public Services (WPS) received permission from regulators this month to move ahead with the $222 million System Modernization Reliability Project, which some say is too much to spend to improve service for a small number of customers.

The utility, though, says something had to be done to improve the area’s service reliability, which is six times worse than the national average.

“We get complaints from customers who are rightfully pretty frustrated,” WPS spokesman Kerry Spees said.

More, longer outages

The U.S. average annual outage minutes per customer for utilities that reported the figure in 2006 was 244 minutes, according to a 2008 study by Lawrence Berkeley National Laboratory.

In 2011, the same figure for WPS customers in Green Bay was 143 minutes, while customers in its rural Wabeno district experienced 1,478 minutes of outages per customer.

Storm-related power outages often prompt public calls for burying power lines, but realities about the costs involved usually quash those discussion fairly quickly.

In this case, Wisconsin regulators agreed with WPS that the severity of problems and the lower cost of rural construction make “undergrounding” economical for customers.

Affected customers include hundreds of cottages and lake homes and a handful of small towns spread across a roughly 75-by-150-mile area along the state’s border with Michigan’s Upper Peninsula.

Nearly 24,000 customers in the area experience five or more outages per year; nearly 5,000 customers experience 10 or more; and 162 lucky customers average 20 more outages annually. When the power goes out, it takes longer to restore, too.

“It’s difficult to work in those areas,” Spees said. “We end up with a lot of single outages, as well as feeders that go down, and because some of those lines are cross-country, getting to them is difficult.”

WPS expects the project will lower system-wide outage minutes by up to 25 percent, and in forested areas reductions will be between 40 percent and 90 percent.

Cost of improvements

Over the next five years, the company plans to bury more than 1,000 miles of power lines and install new distribution automation equipment on another 400 miles of overhead line.

The $222 million price tag is expected to add between $4 and $5 to an average residential customer’s monthly bill. While affected customers support the upgrades, others argued they’re too costly.

“They’re going to spend a lot of money to make a small number of their customers’ power more reliable,” said Charlie Higley, executive director of the Citizens Utility Board (CUB) of Wisconsin. CUB is a member of RE-AMP, which also publishes Midwest Energy News.

Higley said WPS didn’t do enough analysis of alternatives that could have been more cost-effective, such as hiring additional service crews and being more proactive about tree trimming.

CUB argued unsuccessfully to spread the project and rate increase out over 10 years instead of five, or else to do a much smaller project while the utilities studies alternatives in more depth.

The project will cost about $159,000 per circuit mile. That’s on the low end of the Edison Electric Institute’s estimated cost-per-mile range for burying rural distribution lines and far less than similar projects in urban areas.

In a January 2013 update of its “Out of Sight, Out of Mind” report, the Edison Electric Institute (EEI) reported underground conversions for distribution lines costs between $158,000 and $1.9 million per mile in rural areas, and between $1 million and $5 million per mile in urban areas.

Cost-per-mile (range and average) for distribution power lines

“Each construction project is unique and costs from one utility’s study may not be easily comparable with another,” the U.S. Energy Information Administration said in a July 2012 report.

Conversions uncommon

About 18 percent of the country’s distribution lines are buried, including nearly all new residential and commercial developments, according to the EEI. Only 0.5 percent of larger transmission lines are underground.

Costs have slowed the conversion of existing lines. An October 2012 poll by EEI of 1,003 U.S. residential customers showed 60 percent were willing to pay up to 10 percent more for burying power lines, but just 11 percent were willing to pay 20 percent more.

“This information confirms the experience of most utilities and state commissions that the cost of undergrounding is a very important consideration and that customers have limited tolerance for higher costs for utility services to pay for undergrounding,” the EEI report says.

WPS says a 2012 pilot project was supported by customers, as well as town and county governments. Landowners granted easements and most respondents to a mailing said they were interested or supportive of the project.

CUB notes that only 19 of the utility’s 440,000 customers have filed formal complaints about reliability with utility regulators, but Spees said many more complaints don’t rise to that level.

“It’s not a bad thing that WPS is going to be doing,” Higley said. “It’s going to help improve reliability for their customers. We just hope it will pay off with more benefits.”

Originally published August 05, 2013 at 06:00AM at Midwest Energy News