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From the current print issue of NHBR
NHBR Article
N.H. Electric Co-op wins $15.8m ‘smart grid' grant
Wednesday, October 28, 2009
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New Hampshire Electric Cooperative – a day after learning that it will likely be burned by the FairPoint Communications bankruptcy to the tune of $400,000 – will be the recipient of nearly $16 million in federal stimulus “smart grid” money.
“This is really good news,” co-op spokesperson Seth Wheeler told NHBR.
The co-op will be one of 100 companies in the United States – and the only one in New Hampshire – to get a share of $3.4 billion in funding announced Tuesday by President Obama.
The money is supposed to jump-start the futuristic electric grid that would not only “know” when peak usage is happening in real time to adjust rates accordingly, but also would be able to “tell” consumers how much power they are using, and from which appliance, so they can adjust their heaviest usage to the time when power is cheaper. This could theoretically cut capacity and lower energy use by 4 percent in two decades.
For the co-op, the announcement is an economic recharge just when its batteries were running rather low.
The co-op, like most electric utilities, has been feeling the effects of the recession, combined with a drop in revenues, thanks to growing energy conservation.
“Revenues are off because people aren't using as much electricity,” said Wheeler. “We used to get 1,000 new members a year. Now it's lucky if we crack 200.”
Then FairPoint, which rents lines on the co-op's poles, listed the co-op's invoice in its Oct. 26 Chapter 11 bankruptcy reorganization filing.
In the filing, FairPoint listed the co-op as its biggest New Hampshire-based unsecured creditor. That's better status than being a stockholder, who will receive nothing under FairPoint's bankruptcy plan, but it's a precarious position nonetheless.
Under the reorganization plan, the banks will get at least half of the $2.1 billion owed back in cash, plus 98 percent of the new company. The unsecured creditors – if they accept the deal – will get to divvy up the remaining 2 percent on a prorated basis, according to the filing.
How much the co-op will get back on the dollar remains to be seen. Indeed, a lot remains to be seen. The bankruptcy court just held its first hearing on procedural matters yesterday, and a detailed reorganization plan won't even be submitted until early December at the earliest.
Creditors won't find what they will get, and when they will get it for years.
But the co-op counts on that money. While it brings in $160 million in gross revenue, its margin (as a nonprofit, it isn't called a profit) is usually less than $5 million, and its budget to clear the right-of-ways is $2 million, said Wheeler. FairPoint is its biggest pole renter.
“We will have to fiscally juggle our way around it,” he said. “It's not good news.”
Thus a $15.8 million award announcement couldn't be better news.
The money would enable the co-op to upgrade its radio and microwave communications system so it would be able to read every meter from its 80,000 customers scattered from Derry, a few towns above the Massachusetts border, to Pittsburg, bordering Canada.
The new meters will send the information to the co-op, which will then send it back to consumers, so they could go to a Web site and see how much power their refrigerator is using at that moment. Eventually, the consumer will be able to tell the system to automatically shut off the fridge at longer intervals when power usage peaks and is more expensive, and run it longer when it's cheaper, with safeguards in place that it still runs cold enough so that the milk doesn't spoil.
This would enable the co-op to cut capacity from its traditional power sources and rely more on variable sources, like wind and solar.
But this is still years away. First, the co-op must go though a “negotiation process” to obtain the money, which is not automatic, though the co-op's detailed application was a good start, said Wheeler. And it won't flow in all at once. A lot of planning is involved, he said. The company won't start replacing actual meters in 2012.
Although the federal government has been touting the smart grid as a job creator, the co-op won't be hiring more people to implement it, but will try to do the work with existing staff, Wheeler said. – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW
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