Rome wasn't built in a day, and they didn't even have to worry about smart meters.
Xcel Energy has begun to charge customers for some of the expenses involved in creating SmartGridCity, the $100-million-plus project that will outfit around 50,000 homes in Boulder with equipment for real-time power monitoring and management.
That's $2,000 per home to turn down the thermostat and enable demand response services.
We've chronicled some of the financial issues associated with the project in recent months. Sources told us, for instance, that Xcel asked start-ups and others to pay approximately $5 million to participate in the project. Participation, after all, would give smart-grid companies a living laboratory for their equipment, which could pave the way for future sales, the argument went. (After the story came out, one company complained that they had been asked to give $10 million.) The steep tariff prompted many to decline.
The utility also asked the Colorado Public Utilities Commission late last year for the ability to recover some of the costs from ratepayers. The answer was a qualified yes. The Commission has allowed Xcel to recover $11 million from ratepayers, but at the same time ruled that the funds will be refunded if Xcel fails to apply for and obtain a "Certificate of Public Convenience and Necessity" authorizing the project.
Some of the people who were initially running SmartGridCity, such as former director Sandy Simon, have moved on to other companies. Construction on the project was completed recently.
Now, the Colorado Daily has examined some of the testimony from Xcel in the hearings to find out why the cost of the project ballooned from $15 million. The answer: construction is unpredictable.
"The company had to install far more underground fiber than initially projected, substantially increasing the cost ..." Xcel officials wrote in a document filed with the utilities commission last May, according to the paper. "We also ran into unexpected construction conditions, such as having to drill through granite with diamond-tipped drill bits and remove large boulders with cranes and dump trucks."
"With respect to the co-investment from strategic partners, questions remain as to the percentage of contribution from these partners," Harry DiDomenico, a rate analyst at the utilities commission, said about Xcel's rate-increase request at a commission hearing last fall, according to the paper. "Without knowing the level of such contribution relative to the project costs, it is difficult to ascertain what portion ratepayers rightfully should bear, if any. Further, it is clear that not all available funding sources for the project have been assessed."