A conversation with Terry Mohn, Technology Strategist, San Diego Gas & Electric
Terry Mohn is a technology strategist and enterprise architect for the Sempra Energy utilities, representing San Diego Gas & Electric and Southern California Gas Company. He supports the utilities' technology strategy development and delivery by applying technology to business requirements. Terry focuses on company and industry smart grid, smart home and smart metering issues. He also represents the Sempra Energy utilities in major industry consortia, and currently serves as vice chairman of the GridWise Alliance.
Before joining SDG&E in 2002, Terry was chief technology officer for an international broadband media company and founder of two Internet companies.
McNamara: Terry, last time I checked in with you, SDG&E was working on the back-office legacy work for your Smart Meter system integration and planning to complete the first part by October 2008, with mass deployment of the 1.4 million electric and 900,000 gas meters scheduled to begin in November. Is that timeline still accurate? Any new updates you can provide?
Mohn: In the second quarter, SDG&E expects to announce its final selection of vendors for the smart meter technology – meters, gas modules and network communications -- as well as the installation vendor. The first meters will be installed starting in May in a centrally located neighborhood in San Diego that will allow SDG&E to test the technology in a good mix of single-family homes, condominiums and small businesses. What is learned during this initial phase will help the utility prepare for the large-scale installation of the meters later this year. The rollout to all customers is planned for November.
McNamara: What is the status of the meter data management (MDM) integration at SDG&E?
Mohn: Much of the MDM integration is now complete, but a few areas are not. Our development crews and consultants are working against an aggressive schedule to implementing our system in time for our Smart Meter deployment.
McNamara: SDG&E was one of the “early adopters” among utilities planning and implementing AMI / Smart Grid projects. How have you seen the technology options change just in the last two years, and if you were starting out today how would your planning strategy be different?
Mohn: The only certainty about the technology landscape is it will change. We decided to draw a line in the sand and choose an existing technology recognizing the economics may change for newer technologies in the future. Does this mean we are too early? Can one similarly argue to wait for next year’s computer because it promises to be faster than this year’s model? We conducted our analysis and chose technologies at a price point and functionality suitable for our Smart Meter business case. Our system architecture follows the tenets of GridWise Architecture Council’s (GWAC) Smart Grid Framework, which recommends not to build upon any single technology, but to build for interoperability. The beauty of focusing on interoperability is that technologies can come and go, but the basic system improves as it incorporates new and advanced technologies. Of course, we don’t want to incorporate new technologies until the economics and customer benefits can be realized. Therefore, our planning strategy remains unchanged.
McNamara: What have you found to be most surprising in your Smart Meter vendor review / selection process? What has been the most frustrating?
Mohn: The most surprising aspect of our vendor selection process was how close the vendors came to matching our requirements and price points. Two years ago, some of the technologies recommended were purportedly too expensive. Clearly a world market exists for this new breed of smart meters and our vendor proposals reflected willingness on their part to invest in this market, whether it be increased risk on their part or strategic orders.
I think frustration lies in gaps in a number of standards to ensure interoperability for each element of the technology market. For example, when we announced the requirement to communicate between the AMI system and customer’s end loads (e.g. programmable communicating thermostats), we needed to create a defacto standard. Many standards are maturing, such as ANSI C12.19 and C12.22. But other standards, such as cyber security key exchange for AMI, and the much larger smart grid architecture, remain to be codified.
McNamara: How do you see AMI fitting into SDG&E’s plans for the utility of the future?
Mohn: Many people know that, in 2006, we were the first U.S. utility to publicly publish a regional smart grid study. This study was published while our AMI business case was under review by the California PUC. In that study, we outlined that AMI was foundational to smart grid. The economics of smart grid become achievable because the communication backbone would be delivered by the AMI program. Smart grid functionality lies within SDG&E’s “utility of the future” program. We named our business process reengineering “OpEx 20/20” – reflecting a “clear vision” for ongoing operational excellence. SDG&E always viewed AMI as both a tactical solution to achieve energy efficiency and demand response, and a strategic investment for smart grid and future customer benefits. Both programs, Smart Meter and OpEx 20/20, are being implemented. To ensure architectural consistency and efficiency, we have quite a number of staff assigned to both.
McNamara: Utilities have so many options when planning a communications network (Wireless, Wired, Public, Proprietary, etc.). What in your opinion are the key components that should be considered when building an “ideal” communications network?
Mohn: Interoperability, interoperability, interoperability. I can’t emphasize this point enough. Where standards don’t exist, demand them. Once you are convinced you are not locked into a single technology through your vendor selection, and then consider that the communication network is a corporate strategic investment. Try to look for all the business functions and benefits that can be achieved once that network is in place. Then, allow a margin of functional demand growth. We can’t predict every use of the network, just as we can’t predict all the uses of the Internet. Design it for scalability. Several years ago, the Department of Energy created a “Modern Grid Initiative” (MGI). MGI provides the industry some very good guidance. First and foremost, are the characteristics of a smart grid. We believe these characteristics lay out a good strategic viewpoint and applied it to our overall AMI architecture. The MGI characteristics are:
Self-healing - A grid able to rapidly detect, analyze, respond and restore from perturbations.
Empower and incorporate the consumer - The ability to incorporate consumer equipment and behavior in the design and operation of the grid.
Tolerant of attack - A grid that mitigates and stands resilient to physical and cyber security attacks.
Provides power quality needed by 21st century users - A grid that provides a quality of power consistent with consumer and industry needs.
Accommodates a wide variety of generation options - A grid that accommodates a wide variety of local and regional generation technologies (including green power).
Fully enables maturing electricity markets - Allows competitive markets for those who want them.
Optimizes assets - A grid that uses IT and monitoring to continually optimize its capital assets while minimizing operations and maintenance costs.
McNamara: How and when did SDG&E make the determination that it would pursue system-wide integration as opposed to say just focusing on AMR or AMI technologies? Was this decision something that Sempra corporate management supported from the start?
Mohn: When we talk about AMR, we tend to think about one-way communication between our back-end systems and the digital meters. This offers obvious operational efficiencies, but that’s only part of the story. AMI allows two-way communication. It is capable of measuring and recording usage data including hourly or smaller electric intervals as the technology allows for; it allows for all classes of electric consumers to participate in future price-based demand response programs by providing a method for measurement; and, it provides other data and functionality that address power reliability, quality and other electricity service issues. And being a dual-utility, we can tie gas into the system.
We decided on the requirement for system-wide integration early in our planning activities. Knowing that AMI would be foundational for many future functional areas of the business, we needed the ability to send control signals to end points on the AMI network. For SDG&E, the technology is an opportunity to provide customers with data they can use to make smart decisions about their energy use, as well as improve our utility operations.
About half the benefits of SDG&E’s smart meter programs will come from demand-response savings – getting customers to reduce or shift their electricity use during peak-demand times. With two-way communication functionality, customers will eventually see that electricity costs fluctuate throughout the day. The utility can send peak-price signals to alert customers who then can choose to conserve, saving money and helping to avoid the need to build more power plants in the region.
We see the smart meter as the key enabling technology that, over time, will allow utilities to tailor additional services and programs for customers.
McNamara: What steps is SDG&E taking to ensure that distribution automation (DA) remains an integral part of your Smart Grid planning?
Mohn: Several years ago, while planning for OpEx 20/20 (formerly called “utility of the future”), we developed a 15-year roadmap to improve operations and apply new technologies where they were cost effective. We don’t publicize this fact very often, but SDG&E has a significant SCADA foot-print through the distribution system with automated devices installed in over 70 percent of the system. The OpEx 20/20 project allows for the implementation of systems which enable future Smart Grid applications. A new OMS/DMS system and Condition Based Maintenance system will be installed throughout our electric substations, allowing for real time monitoring of our assets. In addition to the OpEx 20/20 project, we are also piloting new technologies such as the Feeder Automation System Technologies (i.e. self healing grid) and optimizing our existing DA installations, using advanced conductors and distributed energy resources.
McNamara: Has SDG&E faced any challenges specifically related to integrating AMI with existing outage management systems?
Mohn: We begin implementing outage management systems (OMS), as part of our Smart Grid plans, in the next few years. We see great opportunity combining OMS with AMI. AMI, by itself, will supply us outage notification. Combined with intelligent DA, we expect to achieve shorter outage restoration times. But, as yet, we are still in the planning phase; and so, have not yet encountered citable challenges integrating the two.
McNamara: In general, what has been SDG&E’s approach toward interoperability, and what response has the utility received from vendors on this subject?
Mohn: SDG&E, as well as our sister utility SoCalGas, are both active, if not founding, members of many standards work groups. We participate in the DOE’s GridWise Architecture Council (GWAC) planning and design sessions. GWAC is singularly focused on electric industry interoperability. We believe in it. We list it in our RFP function requirements. Our architects use the term interoperability in their daily meetings with consultants and implementers. I believe our vendor community is thankful we know what we want. It’s easier for them to focus on the functional differentiators of their products than on how they plug two systems together. Lack of interoperability means more time and money is needed for point solutions that can not be reused in the future.
McNamara: For some utilities, once they have progressed with planning for their own AMI / Smart Grid projects, thoughts turn to larger “transmission of the future” planning. SDG&E has faced its own unique challenges?
Mohn: SDG&E views Smart Grid as including smart generation to smart home, and all elements in between. We are a vertically integrated utility and don’t make the distinction separating smart transmission from smart distribution. Our OpEx 20/20 vision was an entire business vision. Therefore, in our plans, we included fleet, customer care, network, distribution, transmission, and many other business functions. Rather than seeing this as a challenge, we recognized it as the best way to achieve maximum value from our investment.
McNamara: The California regulatory climate, while it has been comparatively rigorous in terms of requiring AMI / Smart Grid filings approval in advance of implementation, does tend to offer a level of cost-recovery guarantee. What has been your impression of how the regulatory process has worked in California with regards to your project’s deployment, and what advice might you offer to utilities in other states where the regulatory roadmap may not be as clearly defined?
Mohn: First, I need to correct the implication regulators mandated a smart grid plan (although this may become true later this year). SDG&E took it upon itself to build a business case for several smart grid initiatives several years ago and independent of AMI. Secondly, as assets age, instead of making investments in traditional technologies, we decided to make investments in newer technologies.
Looking at the larger national picture, the Energy Independence and Security Act of 2007 (EISA07) spelled out cost recovery mechanisms for companies investing in “smart grid” technologies. The attributes of a smart grid are outlined in Title XIII of the act. The new law goes on to instruct states to consider authorizing rate recovery for smart grid deployments, which we see as including AMI infrastructure. We expect the results of this law to dramatically increase the investments in new technologies. Both the Modern Grid Initiative team and the GridWise Alliance will devote much of 2008 to state legislative and utility regulator education around this new law. The industry should begin to see new regulatory filings for both AMI and Smart Grid projects in the next 18 months.
McNamara: But, the push for AMI / Smart Grid in California really did come from the regulatory arena, rather than from customers themselves. How is SDG&E working with customers to ensure that the final system meets their evolving needs?
Mohn: The regulatory climate in California already considers consumers’ energy needs and benefits. For the last several years, California utilities have been working to comply with a state mandate to reduce energy demand by creating a system that rewards conservation during peak energy use times. SDG&E’s balanced long-term resource plan reflects the state’s preferred “loading order” – focusing first on reducing overall demand through conservation, energy efficiency, and demand response as the most cost-effective resource to meet growing energy needs. Second: New generation needs would be met first by renewable energy resources and distributed generation, such as combined heat and power. Third: To the extent the above are unable to satisfy energy and capacity needs, support for clean and efficient fossil-fuel fired generation. Fourth: the addition of new transmission.
From the start, SDG&E has involved local consumers in a “co-design effort” using research, pilot programs and community outreach to get ongoing customer feedback on the project. As part of the initial installation of 6,000 smart meters and modules, we will follow up with customers to track how the installation process went and make appropriate changes before mass deployment later this year. Once the customer presentment technology is in place to offer more online customer service options, we will continue to encourage customers to share their ideas with us on ways we can use the technology to provide more convenience and value to them.
McNamara: I know that SDG&E has been a part of the OpenHAN task force and has been working with the ZigBee Alliance on your HAN planning. What is that SDG&E wants to achieve with its HAN functionality?
Mohn: HAN, or Home Area Networking, is part of our Smart Meter deployment. Smart Meter provides a communication conduit to every electric meter. It allows for remote communication and upgrades. We expect to deliver approximately 100MW demand response with our C&I customers and an equal amount with our residential customers. This capability will come from the Smart Meter infrastructure. It is the physical foundation of the HAN to provide demand response, customer information, and benefits in other departments or operations around the company. Leveraging the HAN functionality has the potential to create new products, services, and capabilities for our customers. The HAN is part of a complete smart grid story. Smart grid depends upon Smart Meters and Smart Homes. It can supply demand response as well as new options for customer supply, such as photo voltaic and plug-in hybrids (PHEVs).
McNamara: What steps has SDG&E taken to address this important issue?
Mohn: For both the Smart Meter and OpEx 20/20 programs, SDG&E set up extensive educational training and communication efforts, including employee communications networks, to identify and address the effects on employees of the related operational changes. We expect no layoffs due to smart meters. We will reduce the number of meter readers and other affected work groups through normal attrition and reassignment during the phase-in of the program and will work with the union to ensure a smooth transition. We also are developing employee training for new operational processes that will result from the new technology. As other utilities gear up for their AMI and utility of the future initiatives, we cannot stress enough how important it is to invest in education, training and communications for a smooth and successful experience.
McNamara: Increasingly, we are hearing our utility clients raise concerns about cyber security. What are your thoughts on this, and what steps has SDG&E taken to address these concerns?
Mohn: SDG&E has taken a number of actions to ensure both the privacy of customer data and a cyber-secure network. We are working closely with our vendor community to ensure our security requirements are met. We are also working with international standards bodies to define the functional requirements, and in some cases, recommending solutions, to address these concerns. Finally, we are working with the Department of Energy and National Institute of Standards and Technology to ensure our recommendations are well thought out with the entire industry.
McNamara: In your opinion, what are the key areas that need to be addressed today to move the utility of the future (UotF) vision along for the industry as a whole?
Mohn: The two most difficult issues utilities address for a UotF vision are 1) building successful business cases that focus on using new technology, and 2) reducing the risk associated with new technologies. UotF programs are rarely single projects, but in fact, large integrated programs. Within a program, there are many smaller projects. The utility needs to allocate benefits from investments across a number of areas in the company; otherwise, a single project would not be able to quantify sufficient value. For example, an investment in a communication system will spread benefits across several areas: condition-based maintenance, fleet dispatch, outage management, distribution automation, and AMI.
Secondly, the risk must be offset by either many pilots or cost subsidies. The GridWise Alliance, along with other utility associations, asked Congress to provide cost reimbursements on new technology deployments. These types of cost offsets will reduce the risk profile of new technologies.
McNamara: How do you think organizations like the GridWise Alliance will support the industry?
Mohn: The GWA has worked very hard these past few years with Congress and regulators to explain the issues around modernizing the grid. It works closely with the DOE to ensure we are meeting the needs of the national energy delivery system. As with other organizations, the GWA is raising the industry’s level of awareness to the issues high enough that the nation can take proactive action. We have a vision of an electric system that integrates the infrastructure, processes, devices, information and market structure so that energy can be generated, distributed, and consumed more efficiently and cost effectively; thereby achieving a more resilient, secure and reliable energy network. When you look at the Alliance’s membership, you will see that there is a balanced mix of engineering and information technology companies participating.
The grid of the future will be heavily invested in computing technologies, such as sensors, cyber-security and real-time analytics. The Alliance members recognize that emerging energy and information technologies have the potential to radically improve the efficient use of the nation’s energy system. We advocate change locally, regionally, and nationally to promote new policies and technology solutions that move us closer to this vision.
But we can’t move the industry without strong collaborative ties to other engaged organizations. We have a strong relationship with DOE’s GridWise Architect Council, the Modern Grid Initiative, Electric Power Research Institute, Utilities Telecom Council and other national alliances. Working together, we will participate in a significant industry transformation.
McNamara: Terry, thanks so much for your time and insights. We look forward to seeing how the SDG&E project continues to progress.
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