Powering Strong Communities

Gaining the Most from Federal Funds: What Public Power Learned Implementing Smart Grid Projects

In 2009, Congress passed the American Recovery and Reinvestment Act, an economic stimulus bill to help pull the nation out of the “Great Recession.” The bill included $787 billion in infrastructure funding, with about $4 billion allocated to the Department of Energy to dole out in grants to build smart grid infrastructure.

As utilities again have opportunities to use federal funding to improve various aspects of the electric grid, through funding from the $1.2 trillion Infrastructure Investment and Jobs Act, we revisited some of the lessons gained from public power utilities that received ARRA funds and what the DOE is likely to do differently this time around. 

Public power representatives shared their stories on how they were able to successfully secure funding from the 2009 stimulus program and offered advice to help prepare others seeking to pursue funding from the 2021 infrastructure bill.

What the Feds Learned

A 2012 DOE special report provides a best-practices outlook on implementation, monitoring, and accountability measures.

On the DOE’s end, the recommendations for how the agency can better administer programs include:

  1. Ensuring that risk assessment, management, and mitigation best practices are in place to assess performance metrics, or through controls for cost overruns or scheduling delays.  
  2. Having robust finance management, accounting, and reporting plans and baselines in place to validate performance results and verify progress reports.
  3. Planning for regulatory compliance to help DOE staff and its grant and contract recipients achieve performance results — including through formal policies and informal guidance — in addition to having contingency plans in place (e.g., replacing projects that did not have timely environmental approvals).
  4. Continuously evaluating federal agency staff and ensuring appropriate staffing levels.
  5. Managing public expectations and aggressively monitoring for potential fraud.

For new funding being made available through IIJA, the Biden administration asked governors to appoint “infrastructure implementation coordinators.” This idea is modeled upon a successful effort used in 2009. This nationwide network of point people will work with state budget teams and across pertinent departments responsible for energy, broadband, and transportation investments. 

Federal efforts to spend down this latest infusion of infrastructure funding might, once again, be a slower process than for other types of readily disbursable or formula funding (such as unemployment compensation). These kinds of discretionary programs typically involve waiting for federal agencies to design new programs or revise rules for existing programs (as necessary), issue formal rules and information guidance, and advertise funding opportunities to solicit applications before the review and contracting process can even begin. Some funding areas might also seek to prioritize projects that reach underserved areas, such as broadband deployment. Striking that regulatory and programmatic balance could be complicated, so to not discourage participation with overly complex program rules, thoughtful program development will be key.

Being Prepared

Located 20 miles northeast of Boston, the Danvers, Massachusetts, Electric Division received $8.5 million in DOE Smart Grid Investment Grant funding toward a $17 million initiative to deploy smart meters to all 13,000 of its customers, upgrade cybersecurity systems, and automate outage management and other distribution operations. Clint Allen, now the assistant utility director, recalled that Danvers was “fortunate to have enough qualified internal staff to handle the multiple facets of the project.” He said that consultants were also necessary to provide guidance in working with the DOE and in developing processes. 

Drafting and implementing cybersecurity requirements for the DOE proved to be the most difficult aspect. “That focus came in the third year, in preparation for site visits and audits. It would have been good to devote funding and begin implementing cybersecurity protocols more as a parallel path with the hardware and software deployment from Day One,” Allen recalled.

There were annual site visits from 2012–2014, followed by an implementation close-out site visit. “It was a heavy lift preparing presentations that needed to address incredibly technical and complex components of the project to an audience that did not necessarily have the background to digest it,” Allen said.

Danvers had its entire smart grid team present for all site visits to help explain the complete design and build-out of a then cutting-edge WiMax network. “Additionally, we had all the internal sub teams on hand to address any technical questions, which included staff on change management, communications, cybersecurity, customer services, integration, and the IT teams. It was really a division- and town-wide effort and we needed everyone involved” to be successful, Allen said.

He also remembered that the post-funding compliance process involved receiving myriad task orders from the DOE and then drafting, approving, and issuing the required policies and procedures outlined in them. “The most surprising thing was that, at those site visits, DOE expected hard copies of all documents on hand, at the ready. This meant we also needed a way to catalog and furnish any one during the in-person review. We had about a dozen bankers’ boxes full of color-coded compliance documents with their own road map; this added a lot of work to an already arduous process,” Allen remembered.

Looking to the future, Danvers Electric would be very interested in grants that could help customers who cannot do so now afford reliable and efficient heat pumps or electric vehicles.

Adjusting as Necessary

Southern California’s Burbank Water and Power serves a densely populated 17-square-mile city just north of Los Angeles. Known as the “Media Capital of the World,” Burbank’s daytime population nearly doubles on weekdays to 200,000 people; it is home to companies including the Walt Disney Co., Warner Bros. Studios, and Netflix. BWP serves 53,000 electric meters, with approximately 87% being residential and 13% commercial.

Jim Compton, BWP’s assistant general manager and chief technology officer, said federal funds from the DOE’s Smart Grid Investment Grant program were used to deploy advanced metering infrastructure systemwide.

“The fiber-optic mesh network build-out was completed within six months, and the physical residential meter deployment took four months, after a year of planning,” he said. The most time-consuming and high-risk elements were in deploying commercial meter replacements since they required two electricians and access to the business. “The extra-large customer meter replacements were also time-consuming, given that most were connected to phone lines to send data back to BWP,” Compton added.

“In retrospect, although BWP approached it as a large-scale program broken into smaller projects, having additional in-house resources would have been helpful to execute a project of this magnitude,” he explained.

While the DOE was very supportive in facilitating activity, BWP conducted “a lot of preplanning, and DOE required a Project Execution Plan that described the overall work plan for the program,” Compton recalled. The project plan included descriptions of the multiple projects, management structure, resources, project management approach, resource-loaded project schedule, budget, risk assessment, and benefits assessments. The DOE also required periodic online reporting and approval of a cybersecurity plan and a metrics and benefits reporting plan.

Compton said that “throughout the process, DOE representatives were very helpful and supportive. Two DOE staff site visits allowed a project review and status process as well,” he added.

BWP did not spend its full share of funds because all the proposed projects could not be economically justified. The funding amount was adjusted and, post-award, the DOE also used a third-party auditor to perform a final incurred-cost audit. “Actual costs expended for both the grant funds and our matching funds were audited for allowability, allocability, and reasonableness,” Compton said, with BWP ultimately being awarded $20 million.

For its current efforts, Compton shared how BWP works to prioritize infrastructure projects that help reduce greenhouse gas emissions in disadvantaged communities. He said that more than 25% of Burbank’s residents live in such communities.

For example, Burbank has low-income and multi-unit dwelling customers who have difficulty deploying EV charging infrastructure on their own. “For that reason, BWP deployments are prioritized to be near multi-unit dwellings and in disadvantaged communities to improve transportation electrification adoption and directly benefit these communities,” he said.

Checking in Regularly

The Municipal Electric Authority of Georgia, also known as MEAG Power, received $12 million in DOE Smart Grid Investment Grant funding. The funding, which MEAG Power matched with a $12 million investment, focused primarily on improving distribution automation and increasing system reliability of the various substations providing power to MEAG Power’s 49 participant distribution communities in Georgia.

Mike Stanley, the joint action agency’s manager of operational technology, said that one of the major factors that made MEAG Power’s application successful was the scoping work to include certain technology upgrades within all 49 communities. “As various phases of the projects were completed over time, it was common for DOE to have discussions with both MEAG Power as well as certain MEAG Power participant personnel, so that they could understand the full benefits of the project from both the transmission and distribution perspectives,” Stanley said. These benefits include reduced outage time, reduced restoration time, improved reporting of system conditions, and improved equipment reliability.

Throughout the project, MEAG Power had regular contact with the DOE. “During the early project stages, we had contact with certain DOE contractual staff that assisted us in coming up with our initial contract with the DOE,” Stanley said. “After the initial contract was established, we were then assigned a DOE technical primary contact for the remaining course of the three-year project.”

That contact had worked in the electric industry and was knowledgeable about the technology that MEAG Power was deploying and assisted with reporting the benefits of the project. Stanley said that MEAG Power had regular check-ins with the DOE and hosted in-person meetings annually. “The in-person meetings were very beneficial; we scheduled DOE to meet with some of our participant personnel to discuss project benefits at a distribution level.” He said that combined meeting cadence was “just about right.”

Once the project was complete, the DOE had ongoing discussions with MEAG Power for the next few years concerning its understanding of the full benefits of the project. Due to the value the smart grid technologies provided to distribution substations, MEAG Power made further investments beyond the project’s original scope.

Looking ahead, Stanley said that, should MEAG Power apply for new funding from the 2021 infrastructure bill, it would consider highlighting project assistance for low-income and/or disadvantaged areas across the communities it serves.