SMUD’s progressive stance toward the smart grid continues into 2012


Paul Lau,
Assistant General
Manager Power
Supply and Grid
Operations, SMUD
Truly smart grid trailblazers, Sacramento Municipal Utility District (SMUD) was already six years into the plan for upgrading their grid with modern technology when the Department of Energy chose the utility for an American Recovery and Reinvestment Act (ARRA) Smart Grid Investment Grant in 2009. The DOE ultimately awarded SMUD with $127 million in funding, representing 66% of all money given to California’s utilities.

The key to their success in attracting this funding, and their deployment since then? Taking a holistic vision of the grid that encompasses the community as the primary benefiting entity, not the utility, says Paul Lau, SMUD’s assistant general manager of power supply and grid operations.

Paul says: “One of the things we really embarked on is to look at ‘how is smart grid going to make their life easier?’ The whole dialogue around our smart grid upgrade has been focused on how to improve the value to the customer.” And it is clearly not just lip service they paid to this idea, hosting “40 days and 40 nights” of community and consumer outreach programs to understand customers’ needs, wants and concerns from the outset and communicate the benefits. Before a single truck rolled to install a smart meter, they had conducted over 130 meetings from neighborhood groups to home owners associations, fire departments to community colleges.

And the outcome?

The key is talking to the customer in their language and helping them understand how our actions will impact their lives, according to Paul. For example “if you want to do distribution automation, people’s eyes roll over. They don’t know what distribution automation is. But then you say ‘Hey, you know what, we can improve our outage communication, which improves our outage restoration’, then people say ‘Ok, I got it, you can get my power back on for me with minimum effort on my part’ and that is the power of being customer centric.”

This has led to SMUD having “95% customer satisfaction rates, which I think is highest in the industry,” say Paul, and “The smart grid reception is the same. With just 10,000 meters left, 98% complete, we still have 95% satisfaction rates. It’s something we’re very proud of here.”

It’s also a good job, given their structure. “Our Board of Directors is all elected officials. So eight times a month, any customer, any member of the public, can come in and give a piece of their mind for three minutes. So if you have 50 customers mad at you at any given time, you can’t operate! They’d be here until 1 am in the morning eight times a month!”

The extensive outreach also showed that customers are extremely diverse in what they see as benefits of the smart grid. While some understand the cost savings, for most residential customers their monthly savings may not be  their top priority because of SMUD’s low rates, so SMUD emphasizes choice of energy use, environmental and community consciousness and making life easier (through proactive communication, faster power restoration or more flexibility in call outs.)

Paul is particularly enthusiastic about the benefits of remote connect/disconnect enabled by smart meters, as it helps them consider  effective prepayment programs and deal with move-in/move-outs as well as non-payers in a much quicker and more effective way. While SMUD goes to great lengths to help customers who have trouble paying keep the power  on by making payment arrangements, referring to social services agencies and other methods, the smart meters allow for almost instantaneous reconnection. So, rather than having to wait for a crew to roll out, it can now be  done remotely through a call center, which increases levels of satisfaction amongst customers and saves SMUD time and money in the process.

So what is next? Well, it’s apparent that SMUD is only just getting started.
The smart meter is clearly only the first step in a much wider grid update taking place. “Before you can do anything you need a smart meter in place, to collect the data. But this is still a dumb grid unless you can make intelligent use of the data that correlates to customer benefits.”

Chief amongst these benefits is a project to help customers choose how they use their electricity through new rates, with SMUD currently testing smart pricing with their customers.

They are also working with their big commercial, industrial and public partners to understand their needs for energy management systems, and how the savings can be effectively shared between them and SMUD. It is no small undertaking, with $40 million allocated to the project.

It’s not all about smart meters, pricing and energy management either. SMUD is taking their holistic thinking to the next level by looking at the whole power generation, transmission and distribution system and how it can be more effectively networked to produce more customer benefits.  They are starting with 12% of their infrastructure to monitor, with upgrades focused on smarter substations, smart switches, and the introduction of new operational software, DRMS, DMS, MDM and CIS systems to give a complete view of the customer.

They’re looking for some “easy wins”, such as Volt/VAR optimization and voltage conservation, which could translate into 2 to 3% customer savings without them having to do a thing. “Wins like this are easier for a municipality like us, because we don’t have the issue of reducing our revenues and margins. We can find operational savings elsewhere and don’t need to raise rates, which are among the lowest in California. Our interests are completely aligned with customers,” comments Paul.

Then there are several R&D projects underway.

One is currently studying the effects of higher renewables penetration and distribution generation on their grid’s reliability, while another one is looking at energy storage and its impact on helping with renewables intermittency. Tied to this is the on-going development of rates that will fairly allocate some of the cost of running the complex balancing operations of the grid to net metering customers.

Another project is looking at the consequences of widespread EV adoption in Sacramento, especially during peak summer hours when there could be a danger that the combination of charging EVs and air conditioner units on full blast at the same time might challenge the capabilities of transformers .

All in all, 2012 looks to be shaping up as a very busy year ahead for Paul and his team at SMUD.

The work seems to be paying off though, with their research and development efforts, forward  thinking and holistic view of the grid giving them enviable  customer approval ratings, grant wins, industry rankings and positive press. The major lesson from talking to Paul? “Our customer is our boss. They’re our owner. What is good for them is good for us.”