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IEEE: The expertise to make smart grid a reality

Interview with James McClanahan

James McClanahan has spent more than two decades in the electric utility and telecommunications industries, working in a variety of management and consulting roles for leading companies in both sectors.

With a 20-year career advancing emerging technologies for the power and telecommunications industries, IEEE Smart Grid Technical Expert James McClanahan is uniquely positioned to discuss the evolution to Smart Grid. McClanahan is a member of the IEEE Power & Energy society and he has served as an IEEE officer at the local chapter level. In industry, he has helped pioneer advanced metering infrastructure and many telecommunications technologies that will be used in Smart Grid. He is director of product support and field services in the power system services division at S&C Electric Company.

In this interview, James McClanahan emphasizes the need for each utility to have a clear and cohesive Smart Grid vision and a champion for that vision within the company. He also discusses the impact of Smart Grid on the utility workforce and the need for utilities to rethink their customer relationships.

Question: What is the most important message that needs to be communicated to the industry about Smart Grid?

With so many engineers and technical people in the utility industry, there tends to be a lot of focus on the technology of Smart Grid. If asked to describe Smart Grid, most people will say that advanced metering infrastructure enables time-of-use rates or that that distribution automation minimizes outages. But these responses miss something very important, and that is the opportunity Smart Grid gives utilities to redefine their relationships with their customers.

For a century now, the utility's customer interactions have largely been limited to meter reading, billing or outage reporting. But Smart Grid introduces new methods of engaging with customers, such as user-friendly web portals for accessing demand-response programs and smartphone apps for changing home thermostat settings.

Smart Grid also gives customers access to new services. For example, community energy storage will support reliability-based "premium" services and distributed generation will support customers’ peak demand while reducing the burden on utility infrastructure and, potentially, reducing customer electricity bills.

We’ve seen how the smartphone industry developed a unique and pleasant "customer experience" for its users and the enormous impact this has had. The utility industry has the opportunity to do something similar for its customers.

How can utilities best explain Smart Grid to the public?

Utilities need to communicate the value of Smart Grid to customers and explain the utility business to customers in plain language so they can understand why we are moving to Smart Grid. This can be done. I was involved in an early trial deployment of AMI and demand-response programs that included time-of-use (TOU) rates. Surveys of customers after the trial was completed showed nearly universal acceptance of the TOU concept. We had almost 1,000 participants, but we also spent face-to-face time with each customer. We explained that 20 percent of their annual electricity costs were driven by less than 100 hours of peak usage each summer. They “got it” and by working together we saved money for both the utility and the customers.

It’s not often that you get to pitch win-win situations to customers, but with Smart Grid there are many win-wins that we can and should emphasize. We should explain how distribution automation and switching, for example, can benefit both customers and utilities.

What are the greatest Smart Grid challenges utilities have right now and how are utilities addressing these challenges?

Workforce and regulatory issues are two significant challenges facing utilities as they transition to the Smart Grid.

The people working on the grid today need a much broader set of skills than they needed previously. This will require training and bringing new people into the industry. It also takes a lot of people to deploy, commission, maintain and optimize Smart Grid equipment.

Today, the industry has a large number of employees that are within a decade of retirement. We have an increasing number of young people coming into the industry, but knowledge transfer will take time. As an industry, we need to make sure that the lessons our veteran employees have learned over the years are passed on to the next generation of management and staff.

The regulatory environment must also adapt. The traditional least-cost approach to rate setting and recovering investments doesn’t make sense in the new era of value-based services that the Smart Grid is introducing. We need a regulatory structure that recognizes and allows for value-based rate making.

What are some of the “lessons learned” from early deployments?

There is a saying that if you don't know where you're going, you'll probably wind up there. Some utilities have deployed Smart Grid without considering how the system would fit into the larger business picture or its effects on individual business groups. And then they struggle to demonstrate the value gained from their deployments.

For a successful Smart Grid strategy, a utility must have a clear and cohesive vision for its deployment, a champion for that vision, and a plan that is accepted across the company. Ideally the champion would be a key executive, but I have worked with utilities where large groups within the company representing all levels of the organization shared the vision and championed it together to make it a reality.

Most successful deployments start as proof-of-concept tests or limited-scale trials. Out of dozens of tests or trials, just one or two might move on to broader use. Utilities need to follow a "crawl-walk-run" deployment progression. Today, certain utilities and technologies have reached the "run" stage, but there are also some that are at the "crawl" stage. That’s how it should be. Companies that try to take on too much, too fast, often find it difficult to scale their deployments and integrate the new systems.

How are utilities incorporating telecommunications technologies for Smart Grid?

The single biggest trend I see is the recognition that telecommunications infrastructure must be looked at holistically.

Generally, one size does not fit all when it comes to serving utility telecommunications needs. A typical utility might employ fiber optics, licensed or license-free wireless or other technologies, for example, to meet the specific performance or other requirements for AMI, distribution automation, or substations. They often also use separate management systems for each implementation.

With Smart Grid, utilities will still need a variety of technologies, but most utilities are building single "umbrella" systems that consolidate provisioning, monitoring, management and optimization for their various telecommunications technologies.

Having a cohesive strategy for utility telecommunications services is clearly becoming the norm. Every major utility that I’m working with either has a telecommunications strategy in place that they’re executing on or they are developing their strategy. The days of "silos" within the utility—each having its own telecom preference and solution that it operates and maintains in isolation of the others—are ending quickly.

How does Smart Grid improve reliability while also reducing operating expenses?

There are a number of ways to illustrate this, but distribution automation and outage management technologies that give the grid self-healing capabilities, and network information provided by AMI, can all produce significant reductions in operating expenses along with improved reliability.

If a downed power pole causes an outage in a neighborhood, for example, distribution automation technologies can locate the problem and perform the switching needed to isolate the damaged line and restore service for as many customers as possible, all within a few seconds. The utility can then dispatch a crew to fix the problem.

With AMI, utilities also have automatic outage notification capabilities that detail when outages occur and which houses are affected. The utility’s interactive voice response system will know if a calling customer is experiencing an outage, give the caller an update on the situation and the option of talking to a customer service representative.

These approaches are much more efficient than the traditional model, which relied on customer calls to report service problems and dispatching series of crews to the field to find problems and then manually restore services.

How does a utility transition its operations and operations staff to Smart Grid?

That is an important question because it's something that was often overlooked early on.

For example, in some early automated meter reading trials I was involved in, employees viewed AMR as something that took away meter readers’ jobs. At the time, meter reading was a utility career entry point and people who started in these roles often moved on to apprentice linemen or other jobs. Some utilities didn't think this through and realized too late that their source of apprentice linemen dried up when they moved to AMR. Fortunately these cases were not widespread, but they highlight why utilities must have career progression plans as they move their organizations to Smart Grid.

People across the organization are impacted by Smart Grid solutions. Protection engineers must understand how to coordinate new distribution automation options. Customer service representatives must be able to support remote connect or disconnect requests. Distribution system operators can now see in real-time whether an outage is caused by a phase-to-phase or phase-to-neutral fault. To realize Smart Grid’s full potential, each of these groups must incorporate the new information and capabilities offered by technology into their day-to-day work practices.

How does a utility establish the business case for a new Smart Grid technology when the business environment for the technology is brand new?

The business environment presents one of the biggest challenges for Smart Grid because utilities must consider their technology investments within a traditional regulatory framework, and Smart Grid solutions don't always fit that model.

For example, while utilities and regulators employ SAIDI and SAIFI indices to measure outages, it is difficult to put a dollar value on the customer costs avoided by preventing an outage or restoring service in 30 seconds instead of 30 minutes. And focusing on utility revenue losses is a poor way to measure the customer impact of an outage, because even a 30-second outage will inconvenience most customers in some way even if revenue losses are minimal.

Utilities have to move to a "value-based" approach for their Smart Grid businesses so they can offer differentiated levels of services, such as a promise of fewer outages per year for a few dollars a month. But utilities must have ways to quantify and price these services when they introduce Smart Grid.

I believe that if customers have access to some type of "value-based pricing" and understand Smart Grid’s benefits, they will support new regulatory models that depart from minimizing costs and that move, instead, toward optimizing the value the customer receives for their dollar.

James McClanahan has spent more than two decades in the electric utility and telecommunications industries, working in a variety of management and consulting roles for leading companies in both sectors. In the mid-1990s he was involved in some of the utility industry’s earliest AMI and demand-response trials. In the telecommunications industry, he has helped advance technologies that can play important roles in Smart Grid, such as broadband over powerline, fiber to the premises and wireless networking. McClanahan has advised many large and small utilities on their telecommunications strategies. Currently, he leads the S&C Electric Company services team that supports the deployment, commissioning, and maintenance of the company’s leading-edge electric utility industry solutions.