With emerging energy technologies, electric utilities face disruption to their long-established business model of selling kilowatt-hours to customers. This case study is one in a 5-part series that shows how public power utilities across the country are innovating in the face of this disruption and responding to the desires of their communities. Learn how they are becoming nimble, customer-focused and respected 21st Century utilities.
EPB began serving customers in 1939 and powers more than 170,000 households and businesses in Chattanooga, Tennessee. Its annual revenues for 2018 were over $729 million. This public power utility employs 542 people and gives approximately $20 million a year back to the community through tax equivalent payments and transfers to the city’s general fund.
EPB operates on the maxim “modernize or die.” The utility knows that if it is unwilling to modernize and continuously innovate to keep up with changing technologies and lifestyles, then its customers might turn elsewhere for their energy needs if and when alternatives become available.
In recent years, EPB has launched a number of groundbreaking initiatives to position Chattanooga for success. The utility’s leaders and staff work together to “solve problems, dream big, and support the growing community.” By providing cutting-edge energy and communications services while holding itself to the highest standards of customer service, EPB has enhanced the quality of life and supported economic growth in the community for 80 years.
While retaining the public power business model, EPB has transformed its organization, infrastructure, business systems, and services to keep electricity affordable and reliable for all customers while introducing new technologies to respond to their evolving preferences. The utility has been recognized for excellence in broadband and electric customer service by J.D. Power and Consumer Reports.
Building a connected future
EPB completed construction of a fiber optic communications network in February 2011 to bring fast, affordable internet to Chattanooga. Approximately 9,000 miles of fiber optics cover EPB’s entire 600-square-mile service territory.
The fiber optic network enhances the capabilities of EPB’s smart grid and brings significant additional revenue to the utility. The EPB fiber optics communication system pays a monthly access fee to the EPB electric system. The access fee revenues have helped to avoid electricity rate increases since 2015.
Smart savings from the smart grid
EPB has a smart grid with more than 1,200 IntelliRupter switches installed on its 12-kilovolt distribution network and more than 200 smart switches on its 46kv transmission system. Using the fiber optic network to communicate, the switches work together to isolate faults and re-route power when an outage occurs. Nearly 175,000 smart meters give customers the option to closely monitor and manage their electricity usage, while giving EPB key information about outages, voltage fluctuations, and anomalies.
The smart grid has resulted in significant cost savings and environmental benefits:
- Outages have been reduced by about 55%, helping the city avoid approximately $55 million a year in costs associated with lost productivity, spoilage, and other impacts.
- Fewer truck rolls to scout and troubleshoot problems have avoided 630,000 driving miles and 4.7 million pounds of carbon emissions.
- Automation of meter reading has saved $1.6 million in annual operational costs; while avoided manual switching costs have saved a further $40,000 annually.
- Voltage control reduces peak demand by up to 30 megawatts per month, resulting in $2 million in annual wholesale demand savings.
Increased reliability is the primary benefit of the smart grid. Over 2017–2018, EPB experienced a 42% improvement in its System Average Interruption Duration Index (SAIDI) and a 51% improvement in the System Average Interruption Frequency Index (SAIFI). This means customers experience fewer – and shorter – outages.
When there is a widespread storm-related outage, thousands of customers are restored automatically and the rest are restored faster thanks to smart grid capabilities. Automated switching has significantly reduced the need to send staff into the field during and after storms to identify outages and restore power, saving more than $1 million in overtime costs.
EPB is well on its way to powering a future with smart homes and businesses, electric vehicles, and smart transportation networks.
By leveraging the Internet of Things, energy storage, and microgrids, EPB hopes to provide advanced energy services for customers as distributed generation becomes integrated with the legacy grid. The utility is exploring blockchain transaction processing, artificial intelligence, and machine learning applications to its operations to enhance efficiencies and customer service.
Public funding benefits the community
In 2009, EPB estimated it would take 10 years to build its fiber optics system and funded it by issuing a $170 million municipal bond. Under the American Recovery and Reinvestment Act, EPB was awarded $111 million to get its smart grid up and running. In about four years (six years ahead of schedule), EPB built the smart grid across its entire service territory and serves each and every customer.
Since 2005, EPB has worked to leverage federal research and development grants to advance and modernize its electric system assets and fiber optics communications infrastructure. The utility procured grant funding in the areas of microgrids, advanced building technologies, solar power, energy storage, and voltage regulation. EPB continues to pursue technological innovation, leveraging public funding to directly benefit its customers and community.
With the public power model, cost savings for EPB result in lower electric bills and greater benefits to the community rather than profits to remote shareholders.
Contributors: EPB Strategic Research.