Hartford Business Journal

16 Hartford Business Journal • August 24, 2020 • www.HartfordBusiness.com By Matt Pilon mpilon@hartfordbusiness.com U tility giant Eversource has been in the hot seat this past month, first for issuing unex- pectedly high electric bills in July, and soon after, for its slower-than-desired response to an 800,000-customer power outage caused by Tropical Storm Isaias. That would draw criticism, regu- lator probes and negative press in a normal year, but frustration levels seemed to boil over, as the events all took place against the backdrop of an economy battered by COVID-19, with an anxious population that's spending far more time at home. Perhaps due to its sudden public relations emergency, Eversource hasn't sought to draw much attention to an approximately $500-million plan it filed with state regulators on July 31 — days before Isaias struck the state — to install 1.2 million smart meters across Connecticut. The proposal, if approved by the Public Utilities Regulatory Author- ity (PURA), would further increase consumer and business electricity rates — by about $214 million over the first five years. But it would also have some po- tential consumer benefits, including improving Eversource's response to future wide-scale power outages, enabling greater adoption of vari- able "time-of-use" electricity pricing, paving the way for growth of electric vehicles and renewable power sources like solar and wind, and reducing over- all energy usage and peak demand. The plan's awkward timing was pure happenstance. PURA, which is now investigating the reasons behind Eversource's increased July rates and preparation for the recent storm, had requested months ago that the Bos- ton/Hartford-based utility and United Illuminating submit the so-called "advanced metering infrastructure" (AMI) proposals by July 31, as part of its ongoing analysis of infrastructure investments that will be needed to create a more modern electric grid. PURA is slated to decide by year's end on what sort of smart-meter investments — if any — to permit utilities to make. Eversource's plan is by far the larger of the two proposals, as United Illuminating previously invested in smart meters and also has a smaller electric territory in the state. Utilities are permitted to earn a margin on such investments of just over 7%, which means Eversource could net tens of millions of dollars if its plan is approved. Marissa Gillett, PURA's chairman, who has spearheaded the agency's grid-modernization review since Gov. Ned Lamont hired her last year, said smart electricity meters located in homes and commercial buildings can be a foundational technology that ultimately benefits ratepayers, utilities and the environment. But Gillett said she's cognizant of the timing of the Eversource proposal, which, even if PURA deter- mines is worthwhile, would increase rates in a state already known for having some of the most expensive electricity prices in the country. "I would say at this point that we will definitely be paying a lot of attention to the price tag," Gillett said. "Ratepay- ers are looking out at the system now and they know they've spent hundreds of millions of dollars on grid harden- ing and they're concerned they haven't gotten the return on their investment for how the utility has deployed it." To put the proposed smart-meter investment in context, Eversource has spent a nearly identical amount ($442.5 million) on storm response and cleanup over 28 major storms since 2012, according to data PURA provided to HBJ. Still, Gillett isn't backing off of her push to explore the best pathways to a futuristic grid. If anything, the recent storm proved that efforts to modernize infrastructure must be accelerated, she argued. Eversource's pitch Eversource's 85-page proposal es- timates the new smart meters would increase annual bills for the typical residential ratepayer in Connecticut by less than $2 in the first year, esca- lating from there, to about $137 per year in year five. Other rate classes, such as those that include small- and medium-sized businesses and manu- facturers, would see varying impacts on their bills by the fifth year, ranging from an extra half-cent per kilowatt hour to just over one cent, depending on their rate category. Over the 20-year life of the meters, Eversource says the benefits produced would exceed the costs, albeit slightly, breaking even by the 17th year. In a statement, Eversource spokes- man Mitch Gross said the high-tech meters "would allow for real-time information regarding customer en- ergy use, as well as rate options where customers could shift their electric usage to off-peak times to help save money on their electric bill." Eversource said that many of the potential benefits, such as reduc- tions in carbon dioxide emissions, are difficult to quantify financially Tough Timing Facing scrutiny over rate increases, power outages, Eversource quietly files $500M smart-meter plan Eversource's smart-meter benefits Eversource says its proposal to deploy 1.2 million high-tech electricity meters across its vast Connecticut territory could improve response times to power outages, but that's not the largest benefit of the plan, which the utility giant says would provide $655 million in benefits over a 20-year period, exceeding an estimated $612 million in costs. Benefit Projected value Explainer Energy reduction $125.7 million Real-time communication with smart meters would allow Ever- source to finely tune voltage levels on the grid, reducing power demand by 2.1%. Less bad debt $76.9 million The ability to remotely shut off a nonpaying customer's meter will lead to a lower amount of uncollect- ible bills for Eversource. Avoided capital expense $75.5 million Not buying smart meters would mean Eversource would likely have to buy lower-tech versions, called AMR meters. This benefit is simply the avoided cost of that purchase. An Eversource employee works on a power line in the wake of Tropical Storm Isaias. PHOTO | EVERSOURCE ENERGY

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