Ratepayers to foot most of cost

July 22, 2010 - Weekly Update From Utility Regulatory News #3978: Deeming smart grid technology to be a prudent investment, the Oklahoma Corporation Commission has preapproved up to $366.4 million in program costs for Oklahoma Gas & Electric Co. (OG&E) to construct a smart grid system.

The estimated costs of the program include a $130 million stimulus grant from the federal government. Although ratepayers will be expected to cover $220 million of the costs, OG&E said the smart grid network will save them money at the same time, including more than $20 million in operation and maintenance (O&M) expenses and $8 million in meter reading costs. The utility was authorized to recoup its project costs from customers via a smart grid recovery rider (SGRR) over a 42-month period, the end of which should coincide with the company’s next scheduled rate case in 2013.

To facilitate reconciliation of the SGRR in that 2013 proceeding, the commission ordered that three regulatory assets be established, one as a smart grid O&M account, one as a stranded meter cost account, and one as a Web portal account. Although ratepayers will be funding the program through the SGRR, they also will be credited with any cost savings achieved as a result of consumption reductions, shifts in usage, or other energy efficiencies made in response to information obtained from the new smart meter equipment.

Despite widespread support for smart grid technology, and in spite of assertions that the smart meters to be used have tested 99.98 percent accurate, one commissioner dissented, saying that a more measured approach should have been taken and that any preapproval of costs should have been limited to incremental stages. Subscribe to URN for the full story.