SMUD (Sacramento Municipal Utility District)

Erik Krause

Located in California’s Central Valley, the State Capital is serviced by the committed individuals at SMUD. This dedicated community-owned utility certainly puts into practice what it preaches, with its headquarters designed around energy efficiency principles. Smart Energy International spoke to Erik Krause, Senior Demand Side Specialist.

Tell us a bit about yourself.
Erik Krause: I am currently the AMI project manager for SMUD, so I’m responsible for everything, from developing the business case for AMI to developing the requirements, as well as going forward with the RFP and full deployment of AMI. I’ve been with SMUD and in the utility industry for the past six years. Before that I spent over 8 years in the software and technology industry. It’s interesting that I entered utilities to get away from technology and I keep on migrated back into the technology sphere!

Please give a brief history of the utility.
EK: SMUD was started back in 1946 when we bought the infrastructure from Pacific Gas & Electric. As a municipal utility we have seven board members from different districts, and we do not focus on profit, but rather the best way we can serve our customer–owners. What has been driving us towards AMI has been a redefining of our mission statement, which had been focused on offering customers reliable power, good customer service, low cost. All our customers expect that. So the board developed a new vision to empower customers with solutions and options to increase energy efficiency, protect the environment, reduce global warming and lower the cost of energy. We are focusing a lot on the green side of things and moving towards energy efficiency and demand response programs.

We have also started an initiative called the Compact with the Customer, which has several pieces to it, including bringing significantly more energy usage information to our customers. We want to be more engaged, want to respond to their challenges and identify how we can improve our services.

We have committed ourselves to decreasing our peak load by 1.5 percent per year over ten years through energy efficiency, and we’re looking at many different programs for demand response, from controllable thermostats through to home area networks. We recently completed a project where we went door to door in a local neighborhood and replaced incandescent lights with compact fluorescents for customers. The focus is to really get engaged, consider time-based rates, and develop more demand response and energy efficiency options.  

What are some of the key challenges that your utility faces?
EK: One of them is what we call our ‘needle peak’ demand, where we are supplying 400 MW for just 40 hours of the year, during the summer. If we didn’t have to serve that load, we would need that much less distribution, production and generation. Advanced metering will give the District a better understanding of how customers are using energy, enabling us to develop better programs that will reduce the peak. But we also realize the need to better educate customers so they understand that between certain times in the summer months they have to be careful.

Another thing we need to look at is maintaining top-notch service in times of change. Some areas of our distribution system were designed to handle simple homes, but now have to handle air conditioning, several new appliances, plasma screen TVs – all devices that use a lot more energy.

What plans do you have in place for implementing AMI, and what do you envisage as the key benefits?
EK: We first considered AMI in 1997, but financial analysis showed us that the time was not right. Because we are a not-for-profit organization, we simply couldn’t go out there and raise our rates to pay for an expensive AMI solution. In 2004, when we were looking at solving access problems, we thought about ERT meters. This led us to draw up an overall business case, with assistance from Plexus Research. At the time, the big issue from a SMUD perspective was reducing operational costs – the smart meter cost was still so high that it didn’t make much sense for us to go ahead with a full rollout. So we ended up going forward with the ERT meters with a mobile collection technology. We started implementation in January 2007, planning to complete deployment in 2010.

But we still kept in touch with what was happening in the AMI industry. We updated our AMI Business Case in 2007, and decided to include demand response benefits, time-based rate benefits, and distribution-related benefits. Based on our new analysis, we ended up with a significantly positive business case for the more sophisticated meters. The board agreed, so we’re ramping down the deployment of drive-by meters, in effect going back to 2004 and balancing out meter reading routes. Our new RFP should be out by the end of the year, and will target commercial customers. We envision they will make use of these new time of use rates and other benefits, and we hope to have the commercial sites completed by 2009. What we are trying to figure out now is how to do this with residential – do we go parallel or sequential? Our thought is that it will be close to parallel, starting 16 months after the commercial roll out begins. We aim to get the entire project completed by 2012.

What strategies have you implemented to strengthen relationships with customers?
EK: There are a lot of things in the works. We are close to finishing 40-odd focus groups, talking to a variety of customer segments, from large commercial operations to a variety of residents. We are giving them a background to what we are doing, some of the ideas we have for the pricing programs, and information about load management and energy efficiency. We are asking them what they think, to get a general feel for which of these programs they would prefer, and what they would want to control. There will be some extra quantitative studies done as well.

We have also formed a Community Engagement Group, which is purely focused on getting involved with the community – business organizations, community groups, neighborhood associations, schools, churches, everything. The idea is to keep that conduit open and to get an understanding of the new products and services the community wants. We also have the Energy Technology Center, where we hold classes all the time, and the public is welcome to attend if they want to learn more about the utility.

How do you manage customers who steal energy?
EK: Energy theft is not high at all, but we have experienced a significant number of ‘grow houses’ springing up in the area. We see AMI assisting us in finding these houses from a transformer load perspective – it will tell us that we’re sending out X amount of kWh and only billing for Y amount, and alert us to a potential problem.