EDITOR’S NOTE: Chicago is in the vanguard of cities being transformed by the electric power revolution, a topic of the conference, Empowering Customers & Cities, November 4-6.
This is the first of a two-part series.
These are exciting times in our industry. We are probably faced with more challenges than at any time I can remember in my 32 years in the business. There are also more opportunities than ever to demonstrate the value utilities are uniquely capable of providing at a time when the modern digital economy is increasingly dependent on electricity.
Much of our industry will change to achieve the wants and needs of the future, but a concept fundamental to our industry -- that substantial consumer value can be unlocked by the stitching together of a network or grid -- is never more relevant than it is today -- and is unlikely to be any less relevant for some time to come.
As we build the model that will make this possible, numerous issues need to be addressed, and I’ll get into that.
Clearly, for utility companies – and for our stakeholders – it is time to re-think utility regulation and business models that will deliver value from an electric system that will increasingly be powered by distributed energy resources.
As a more distributed future unfolds, the distribution grid can naturally become a more valuable link between customers’ resources and bulk power markets. Rather than being a one-way street for electricity to reach customers from faraway generators, the distribution system will be required to support bi-directional power flows from disparate input/output points across the distribution system.
At ComEd, we’ve begun this transition through the grid modernization program established by the Illinois General Assembly’s passage of the Energy Infrastructure Modernization Act (EIMA), also known as the Smart Grid bill, which was enacted in November of 2011.
The legislation authorized us to invest $2.6 billion to strengthen and modernize the system serving northern Illinois where we serve about 4 million customers in a service territory of 11,000 square miles. We began work in January of 2012 and we’ll complete this work with the installation of 4 million smart meters by the end of 2018 – we’ve installed 1.5 million smart meters so far.
Importantly, the legislation established a performance-based formula rate making model that provides greater predictability over cost recovery which enables us to make the investments needed to move our aging infrastructure into the 21st Century.
We’re more than half way finished with the grid modernization portion of the program. This work is strengthening the infrastructure by replacing hundreds of miles of underground and mainline cable; refurbishing nearly 28,000 manholes; inspecting and treating more than 500,000 wood poles and completing advanced storm hardening solutions on nearly 600 miles of the system.
We’ve installed nearly 2,000 additional distribution automation devices or “smart switches” that result in fewer outages by rerouting power around potential problem areas. Substations are also being upgraded with digital technology to detect – and prevent – potential problems from occurring.
These investments helped the company avoid 1.2 million customer interruptions in 2014 when the system reliability was the second best on record, second only to the performance in 2013, which was the best in company history. Overall reliability was in the top 10 percent of large utilities in the U.S. in 2014 and storm restoration performance has improved by 30 percent compared to 2011.
We’re also already leveraging the smart grid platform to enhance the value we offer municipalities. In January, we launched Smart Streetlights pilot projects with two Chicago area suburbs using LED technology for greater energy efficiency and lower bills.
We’re building on this smarter, more resilient and flexible foundation for the future as we work on a long-term strategic plan that will serve as a road map for the next 10 years.
We’re also evaluating opportunities to leverage the wireless mesh communications network that runs the smart grid to offer water metering services to municipalities -- and we’re exploring the full suite of smart city technologies as well.
The highest priority is the creation of regulatory policy that will allow for optionality – or the ability to thrive under a wide spectrum of potential future business models.
We’re still developing the overall structure of a preferred utility model, but several key features are emerging. The preferred utility model must create value for customers. The preferred utility model must also secure financial recovery of the use of the grid. The preferred utility model will utilize the utility’s natural competencies as a grid owner and operator.
Kevin Brookins is ComEd senior vice president, Strategy & Administration.
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