In the continuing saga over runaway costs in SmartGridCity, a smart grid/demand response project slated to link 2,000 homes in Boulder, Colo., the state’s Public Utility Commission will allow Xcel Energy to recoup nearly $45 million in costs from ratepayers. The total cost is estimated at $100 million plus.

The decision by Administrative Law Judge G. Harris Adams found that the investment is “prudent” and that there is benefit for ratepayers “directly through the technology deployment and learning process occurring within the pilot.”

Some of the benefits are already in place, according to Greentech Media’s recent interview with Xcel spokesperson Tom Henley. The utility has automated four of its five substations (one was not touched in order to allow it to act as a control group to assess gains made in the project) and created a broadband-over-powerline network that reaches 46,000 power meters. Roughly half of those meters are smart meters.

Even with the benefits, the decision by Colorado’s PUC is not a blank check. The filing stated that the partial recovery was warranted, but any other costs would have to be covered by Xcel Energy.

Substation automation, while important, is a hard sell to consumers bearing the cost of smart grid projects. From Baltimore to Hawaii, PUCs are questioning calls for cost recovery without explicit benefits to consumers.

The home automation pilot is being conducted on 1,200 homes. Right now, it's on standby until security issues can be worked out. But at the cost of $2,173 per location, it’s hard to imagine that any results from the pilot will sway public opinion, unless home automation includes a free 3D television.

Xcel is also slated to begin a time-of-use pricing pilot. Time-of-use pricing, of course, requires a network. Consumers that reduce power consumption during peak periods will get a rebate. Those who don't will see higher bills. Time-of-use pricing pilots are underway across the country, although a full-scale residential deployment of TOU pricing is still probably years away.

The decision is surprising, as it approves a figure that is three times higher than Xcel’s original estimates on cost recovery, and which has already been opposed by Colorado’s Office of Consumer Counsel and two of the state's largest industrial electricity consumers.

It is even more surprising because, as of late, PUCs are demanding consumer benefits that are tangible in many smart grid projects. The ruling also allowed the city of Boulder to withdraw from the cost-recovery proceedings.

The OCC is expected to file an exception before the decision becomes final in two weeks.