Next week the Colorado Public Utilities (PUC) Commissioners will conduct a proceeding to determine Xcel Energy’s Demand Side Management (DSM) Strategic Initiatives plan for the years 2015 through 2020. This DSM plan includes efficiency programs that give customers incentives for investing in efficient light bulbs, efficient appliances, and other energy saving measures. As part of this plan, Xcel is proposing an innovative project called Distribution Voltage Optimization (DVO). The principle behind DVO is the adaptive control of voltages to a lower range, within national standard voltages. Almost every appliance works better and more efficiently in the lower voltage range. To accomplish this, Xcel will make a $92 million investment in distribution grid upgrades and control hardware and software. The project will be installed over five years.
DVO would reduce energy use for all customers by about 2%. As a result, customers would see lower bills, and CO2 would decline by approximately 975,000 tons per year, by avoiding the combustion of fossil fuels. Service quality would also be improved by having more precise control of voltage levels on the electric grid.
WRA supports DVO as part of Xcel’s DSM plan because it is good for customers and good for the environment. WRA will encourage PUC Commissioners to approve the project and provisionally approve mechanisms to reward Xcel for the energy savings that come from implementing the project. Because DVO reduces utilities’ income, incentives encourage Xcel to make investments in DVO and other technologies that reduce customer energy use and bills. If the PUC approves the project, Xcel would be the first utility in the country to use DVO on its entire system.
Some say DVO is not a true energy efficiency measure because DVO saves energy in a new way. Traditionally, customers are the ones who take action for energy efficiency in DSM programs. For example, a customer may receive a rebate to defray the cost of upgrading to a newer and more energy efficient refrigerator. Because of this investment, the customer will see a decrease in her energy bill. DVO is different because the customer doesn’t actually have to do the work to lower her electricity bill. Instead, the utility installs and manages DVO and, as a result, each of the customers’ appliances work more efficiently. Although the outcome – energy savings – is the same, some do not think that Xcel should receive incentives for these improvements to the distribution grid. But WRA wants to make sure this opportunity for 2% energy savings from DVO is not ignored. Because it is DSM, we need to encourage utilities with incentives to invest in these upgrades to the electricity distribution system. DVO is a big step in the overall improvement and evolution of the distribution grid that will make the energy we use cleaner, more reliable, and more economical.