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This week the U.S. Treasury Department and the Department of Energy announced an agreement that grantees of ARRA smart grid funds will not be taxed by the government. Now mind you funds have still not been distributed. In the announcement's details, the Internal Revenue Service gives safe harbor under section 118(a) of the Internal Revenue Code for corporations that receive funding under the ARRA grant program. A collective sigh of relief is being heard in the media though some comments that accompany that sigh is the equivalent of hand-wringing that it took so long in the first place. Fair enough. But was it really unexpected? It's the government after all, and you can't exactly call it a nimble organization that makes quick decisions. So there is really no surprise that the involvement of another bureaucracy – Treasury Department in this case – acted as a blocker of progress. I'm hopeful though that the money will follow sometime soon…….

Well over a year ago (prior to the launch of this blog) I wrote a newsletter article titled Lessons from the Mainframe Era - Don't Stifle Innovation! It revisited IBM's decision in 1969, in response to an antitrust suit from the U.S. Justice Department, to unbundle its hardware and software - enabling 3rd parties to develop software on IBM hardware and unleasing a wave of innovation that created the software industry as we know it today. The article drew an analogy to the utility industry of today and concluded that it was time for utilities, regulators and policy makers to revisit IBM’s decision in 1969 and promote open access to real-time consumer energy usage data - which would spark another wave of innovation – this time from independent providers of energy management and distributed generation services.
Google's announcement last week that it was opening up the application programming interface (API) to its PowerMeter consumer energy management portal would seem to be in line with the premise of my article. However, will Google's actions alone, despite its size and influence in the market, actually drive innovation?

E.ON has hired Goldman Sachs to help with the sale of Kentucky Utilities and Louisville Gas and Electric. That leaves National Grid, EDF and Iberdrola as three of the few European utilities with a presence in the U.S. European ownership has made its mark on U.S.-based utilities in many ways, including, for some, in IT strategy and infrastructure. It's been quite awhile since U.S. based utilities ventured into Europe, and now the economy seems to have Europeans departing from the U.S.

The National Association of Regulatory Utility Commissioners (NARUC) recently issued a statement opposing the regulation of power markets by the CFTC. Their concern is that a a House bill on financial regulatory reform contains a clause that could be construed as moving oversight for the power markets from the Federal Energy Regulatory Commission (FERC) to the Commodities Futures Trading Commission (CFTC). Just thinking about the complexity of adding another layer of oversight - that physical deals on the power markets would need to be confirmed on ICE and NYMEX - and the electronic information flow required to accomplish that makes ones head spin.

This week is filled with news about the nuclear industry in North America. The Obama administration announced $8 billion in load guarantees for nuclear, the Wall Street Journal has a front page article on small nuclear reactors, and road blocks have been removed for nuclear development on at least one project. The big action, however, has been in the emerging economies. The nuclear renaissance is fueled in part by concerns about climate change and the fact that nuclear generation does not produce GHG (although there are still some concerns about nuclear waste). And of course, construction brings jobs for stimulating the economy. Regardless of where the development is, are software vendors ready for the nuclear renaissance?

Boulder's local newspaper, the Boulder Daily Camera, recently reported that the Colorado Public Utilities Commission has decided to take a larger role in regulating Xcel Energy's SmartGridCity project in the same manner that it regulates other large capital investments like power plants. This will increase the transparency of the project and is primarily a reaction to rising costs. In March 2008, Xcel Energy projected that capital expenditures for SmartGridCity would be about $15.3 million. The company now believes the total cost will reach $42.1 million, not including the costs of operating and maintaining the new grid. It's widely believed that the all-in cost will be around the $100 million mark.
In December, the Public Utilities Commission approved Xcel Energy's request to raise customers' rates 6.5 percent. The majority of the increase will be used to pay for Comanche 3, Xcel's new coal-fired unit at its power plant outside of Pueblo. But $11 million from the rate increase - which went into effect Jan. 1 - is earmarked to cover costs associated with SmartGridCity, including capital investment, taxes and operation and maintenance fees for 2009 and 2010.

Next Thursday, January 14th, we will present our annual Top 10 predictions for the North American utility industry in a webcast that will be broadcast live from 11:00 a.m. to noon, U.S. Eastern time. Use this link http://bit.ly/6xOLhF to register for free.
North American utility companies were negatively impacted in 2009 by the recession, which decreased energy consumption and thus reduced utility revenues, as well as by the credit crisis - both of which forced utilities to curtail spending and conserve cash. In 2010 we expect North American utilities, particularly electric utilities, to benefit from the general economic recovery but more importantly from government intervention in the form of stimulus funding, tax breaks and other favorable policy initiatives.

Whether or not a climate change bill passes the Congress this year, companies operating power generation, such as utilities and merchant generators, are facing increased regulation and enforcement by the EPA. Two examples are the greenhouse gas reporting rule and the recent settlement involving the Duke Gallagher coal-fired plant. It may be time for power generators to revisit their IT infrastructure supporting carbon management.

On December 10, Vernon Turner, Chris Ingle and myself, held a press conference in Copenhagen, to coincide with the United Nations COP15 meetings, and announced the results from a special report we completed on the role Information and Communication Technologies (ICT) can play to curb 5.8 billion tons (GT) of CO2 emissions by 2020. The research was conducted by IDC and IDC Energy Insights and jointly sponsored by Fujitsu, Hitachi, HP, Intel, and Schneider Electric. During this press conference we also released our first ICT Sustainability Index, in which the G20 nations have been ranked on their ability to reduce their CO2 emissions through the focused use of ICT. Japan…

On October 30, 2009, a consortium made up of Enel, Telecom Italia, Electrolux, and Indesit announced a plan to develop and test a new system, called Energy@Home. Energy@Home will enable "smart appliances" to manage themselves, consequently adjusting households' power consumption. The system will also relay information regarding actual household consumption measured by existing Enel smart metering infrastructure to the consumers on their PC, mobile phone, or on the appliance itself.

On November 3, 2009, IDC Energy Insights held the first "live chat" event. Jill and I jumped at the chance to be the sacrificial guinea pigs for this novel format. As it turns out, it was a hectic half hour with a few minor hiccups but we got though the experiment just fine.
The questions we received were thoroughly inquisitive and thought provoking. In total we received 42 questions from 109 participants. An amazing participation rate! While we couldn't answer all of the questions we did manage to respond to 13 of the 42.
We choose to banter about a nascent trend in customer information systems (CIS), which is a critical software technology for the utilities' long term success in the smart grid journey. The log from the event is below. We hope you enjoy.

Take 400 applications, 200 reviewers, 5 months, $3.4 billion, one Secretary of Energy and bang! 100 utilities are off to the races. This afternoon the DOE announced the awardees that were eligible for the $3.4 billion in ARRA 2009 smart grid investment grants as defined by Section 1306 of the 2007 EISA. It is worth noting that the $615m in smart grid demonstration project grants (Section 1304 of EISA) are yet to be awarded. So what's the net-net?
100 applications were approved to receive some amount of grant money in what is officially the 1st of three rounds of grant money to be disbursed. The reality, however, is this is the last of one round of funding....

I was standing in the front of a conference room packed with attendees from the APPA Customer Connections event today when the U.S. DOE released its list of Smart Grid Investment Grant recipients. You can only imagine the number of mobile phones and Blackberries being consulted for the results. There were cheers and applause as some attendees found out that their smart grid wishes had been granted. Those whose proposals weren't selected stayed quiet. There emerged a clear dividing line between winners and losers. Now that I've had a chance to review the list of recipients I'd like to comment on those winners and losers.

Despite the fact that utilities have never been early adopters of new technology, it has been interesting to note that some U.S. utilities have begun experimenting with social media tools like Twitter, Facebook and YouTube. Maybe it's because, unlike a new customer information system or even a new consumer web portal, these tools require relatively little up front investment. Maybe the utilities have been caught up in the buzz surrounding the smart grid – although I'm not sure that social media tools qualify as smart grid components. And maybe we're seeing the impact of a demographic transition in the utility workforce and the utility customer base. In any case it's an interesting trend.

Let's compare the smart grid definition given in Europe by Eurelectic and the one adopted by the U.S. Department of Energy.
The first says: "A smart grid is an electric network that can intelligently integrate the behavior and actions of all users connected to it — generators, consumers, and those that do both — in order to efficiently ensure sustainable, economic, and secure electricity supply."