Proving the Business Case for the Internet of Things

NextEra Energy to accelerate Hawai‘i smart meter programme following utility takeover

Steve Rogerson
September 8, 2015:
 
Florida-based NextEra Energy is promising a mass smart meter roll-out in Hawai‘i when it completes its $4.3bn takeover of Hawaiian Electric.
 
This was part of a package of 85 commitments, of which more than 50 are new, that would accelerate the achievement of Hawai‘i’s goal of an affordable, 100 per cent renewable energy future by 2045.
 
These commitments, which were made as part of filings with the Hawai‘i Public Utilities Commission (PUC), include customer savings of nearly $465m and economic benefits to Hawai‘i of approximately $500m in the first five years following the close of the merger – a total of nearly $1bn in customer savings and economic benefits.
 
Customers should benefit from NextEra Energy’s ability to accelerate the development of more modern grids throughout the islands through the deployment of smart meters, including time-of-use rate options, as well as improvements to overall service, reliability and performance. In addition, NextEra Energy reinforced its commitment to the communities served by Hawaiian Electric and the state of Hawai‘i by pledging to maintain Hawaiian Electric’s current levels of charitable giving for at least ten years and to keep Hawaiian Electric locally managed.
 
“Our expanded set of commitments is a clear reflection of the thoughtful input we have received from many key stakeholders, including the governor and the consumer advocate,” said Eric Gleason, president of NextEra Energy Hawaii. “We fully embrace Hawai‘i’s goal of 100 per cent renewable energy by 2045 and believe this partnership represents the best path forward to achieving this goal – the most ambitious of its kind in the nation. This is a goal that will be accomplished by many people working together collaboratively, and we hope to play a major role in that effort.”
 
He said as the world’s leading generator of renewable energy from the wind and sun, the company was well positioned, alongside Hawaiian Electric, to partner with the state to achieve its 100 per cent renewable portfolio standard by 2045, as well as integrate more rooftop solar, modernise the electric grids and lower customer bills.
 
“Achieving Hawai‘i’s 100 per cent renewable energy goal is of critical importance to all of us and we firmly believe that the combination of NextEra Energy and Hawaiian Electric will best position our state to realise this future,” said Alan Oshima, Hawaiian Electric’s president and chief executive officer. “As one of the world’s most innovative companies, NextEra Energy’s expertise and resources will significantly accelerate our efforts to strengthen Hawai‘i’s energy infrastructure, lower customer bills and continue our active support of our local communities. In NextEra Energy, we have a partner whose corporate values closely align with our local values to do what’s best for customers and our communities. NextEra Energy has underscored this with a substantial set of commitments to the state of Hawai‘i.”
 
The estimated nearly $465m in customer savings include $172m in capital expenditure savings, $133m in savings from a four-year general base rate case moratorium, $60m in guaranteed rate savings from forgoing a portion of the increase in revenues due to decoupling, $67m in fuel savings, post-rate moratorium $30m in non-fuel operating and maintenance cost reductions, and $3m in lower interest expense.
 
The company estimates that the cumulative net savings per residential customer of Hawaiian Electric by island for the first five years (2016 to 2020) after the completion of the takeover ranges from roughly $345 to $475, for an average across all islands of nearly $400. It has committed to establish a $10m customer benefit fund paid over four years following the close of the merger to be used at the PUC’s discretion for what it deems appropriate and in the public interest.
 
There will be an acceleration of Hawaiian Electric’s deployment of smart meters, including time-of-use rate options, by approximately two years. Smart grid technology should provide Hawaiian Electric with better ability to manage its electric grids, including faster detection and restoration of outages, and give customers access to information about their energy usage and pricing options to help them better manage their energy costs.
 
It plans to coordinate with key customers in developing updated emergency response plans for Hawaiian Electric and will file the plans with the PUC within 12 months of the takeover’s completion.
 
NextEra Energy’s will use the experience of its utility, Florida Power & Light (FPL), which has deployed more than 4.8 million smart meters and more than 12,000 intelligent devices.
 
Since 2001, FPL’s investments in high-efficiency, natural gas energy centres have enabled the company to cut its use of foreign oil by more than 99 per cent – from more than 40 million barrels to less than one million barrels annually today. Since 2001, the effectiveness of these investments has saved FPL customers more than $7.5bn on fuel costs and prevented more than 85 million tons of carbon emissions.
 
• The US Department of Defense (DoD) has accredited the Intelligent Power & Energy Research Corporation’s (IPERC) GridMaster control system at Camp Smith, Hawai‘i, with PRA platform IT risk approval. This is the first and only DoD accreditation of an installation microgrid control system.
 
The PRA was issued after rigorous security testing and authorises full operation of the GridMaster-controlled microgrid supporting a mission-critical Pacific command facility. IPERC led the design of controls, communications and cybersecurity for this capstone project of the three-phase Spiders (smart power infrastructure demonstration for energy reliability and security) programme.
 
Several DoD and multi-agency teams performed testing and evaluation of the system at Camp Smith and at off-site locations, encompassing both hardware and software.
 
“The first-ever military accreditation of a microgrid control system provides commercial microgrid integrators, and customers such as utilities and municipalities, a high level of confidence that a GridMaster-controlled microgrid will exceed their requirements for information assurance and cybersecurity,” said Darrell Massie, CEO of IPERC.