Belmont Municipal Light Dept. proposal for new substation

1. These are good and important questions and I’ve been asking them as well about this proposal. I’ve encouraged a couple of folks with greater knowledge of the issue to respond here.

2. I’d like to respond to Caroline’s concerns related to the BMLD substation proposal. I am a member of the BMLD Advisory Board and, I and the entire board support both the 115 kV project and efforts to bolster conservation. These two efforts are not in conflict with one another, nor does pursuing the 115 kV transmission substation project foreclose or in any way compromise Belmont’s conservation efforts and opportunities.

   The 115 kV substation project addresses an immediate system reliability issue. The current system falls short of even meeting NStar’s contractual obligation to serve the needs of BMLD’s customers, so we are in a situation where something must be done soon.

   Electricity usage has been increasing in Belmont as it has across the country. What’s important to understand about Belmont’s customer base is that it is comprised mostly of residential users – a customer class whose electric use is increasing because of the conveniences of modern life like computers & peripherals, plasma TVs, cell phones, PDAs, etc. Electronics related power uses (referred to as “other” uses by economists and forecasters) currently account for over 40% of residential power consumption in the US. The growth in this area is showing no signs of slowing down.

   BMLD has conservation and efficiency programs that it currently administers – like EnergyStar appliance rebates and home energy audits. We are also looking to do more. We are planning a smart meter pilot project, with the ultimate goal of converting all the system’s meters. Smart meters physically enable the use of time-of-use electric rates that can encourage both conservation and shifting of electric use when the system is peaking.

   Although electric power generation accounts for about one third of current US greenhouse gas emissions, there are far more low emission and zero emission technology options in the power industry than in, say, the oil refining sector. Climate change legislation from Congress will help to encourage a low carbon transformation of the power supply, but this will take time to complete.

   Because some of the low and zero carbon technologies already exist in the electric power industry, a long-term greater reliance on electricity may not be all bad. As mentioned in Caroline’s post, we also have the potential need to supply electric vehicles down the road a stretch (pun intended) – these would further increase electric usage. But since New England has a natural gas-heavy generation mix, a shift from gasoline engines to plug-in hybrids has the potential to reduce greenhouse gas emissions, even in the near term. The battery technology still needs to be proven, but a future with electric cars is something that utilities, including BMLD, need to start planning for.

3. I admit to being uninformed about the details of this specific substation proposal. But perhaps that may be a virtue. Here’s some K.I.S.S. analysis.

   The $34,000,000 cost of the proposed substation divided by the 10,000 residences in Belmont equals $3,400 per residence. That’s approximately ten times the cost of a smart meter, which would allow BLMD to time-multiplex the air conditioners that (presumably) create the peak loads on the hottest summer days. (Time multiplexing means agreeing that not all of the AC units in town need to run at exactly the same time – this is similar to the concept of a traffic light (not everyone trying to squeeze through an intersection at once)). The usual method of working around the contract laws about involuntary interruption of service is to have each smart meter owner agree to such interruptions, usually by discounting their cost of the electricity.

   http://online.wsj.com/article/SB124050416142448555.html

   Smart meters (and conservation, load management, and residential solar electricity production) all will give BMLD some negotiating leverage when its single supplier (NStar) wants to raise the instantaneous price of electricity. (Here I show my ignorance – I don’t know if BLMD has negotiated a fixed annual price with NStar or pays the going rate second by second; either is possible and each has its own pros and cons.)

   Diversification is good. Having a single supplier of electricity (NStar) and having only very weak control over consumption AND encouraging greater capacity (i.e. dependency) seems a recipe for BMLD and the residents of Belmont to be at the mercy of Enron-like market manipulation in the future. (In California in 2001, Enron manipulated the commodity price of electricity into spikes hundreds of times the nominal price. This resulted in Enron’s collapse and a special election recalling the governor.) I hope BMLD is discussing with its neighboring Municipals, for example, helping fund renewable projects (e.g. Hull’s wind projects), for which perhaps BLMD could effectively consume its share of that power, if not the actual electrons themselves.

   Solar panels are an especially elegant solution to residentially-dominated peak load challenges, because solar panels produce power when the Sun is out, i.e. when loads (especially those from air conditioners) are highest. Perhaps some thought should be given to covering with solar panels the Belmont High School roof, athletic facilities, and adjacent rail road tracks, which for the same $34M would produce 4 megawatts of power whenever the Sun is out for at least the next 20 years. Actually, the cost to BMLD might be (much) less than $34M for such solar panels, as their market price is dropping precipitously and there tends to be government incentives that pay a significant fraction of the cost. (Someone check that – such incentives may not be available to BLMD).

   Freedom (from exorbitant prices and system wide brown outs) is just another word for nothing left to loose (having developed low patterns of consumption).

   I reiterate that I do not know the details of the proposed substation project. If the old units are failing due to inadequate maintenance over the years, then perhaps an upgrade makes sense, although none of the comments I’ve read give me that impression.

   I think it is prudent to prepare for the future. But let’s not put the cart before the horse (pun intended). I very much look forward to a time when charging of electric transportation (cars, bikes, etc) would create an electricity distribution problem for Belmont. It seems likely that one could build a substation readily and quickly in comparison to the rate of adoption of electric propulsion. Build it (electric propulsion) and they (substations) will come, not the other way around. Besides, recharging batteries is definitely something that can be time multiplexed away from peak load periods, or better yet, integrated elegantly with renewable energy sources.

   Thank you Will Brownsberger for caring, and for soliciting input.

4. Oops, I meant no disrespect by the typo of BLMD instead of BMLD.

   1. The 34 million dollar figure is borrowing authority. It is not clear that exactly how much money will ultimately be required. Moreover, a significant part of the money is to rebuild distribution fac ilities and a new substation, steps which are long overdue to assure reliability, regardless of the transmission upgrade.One critical point, however, is that if we get favorable designation (i.e. PTF status)by the New England ISO, which we are seeking, the net cost to Belmont ratepayers, when you back out the rates we currently pay N Star for transmission, a need we can eliminate with the new line, may actually be negative. Stated more succinctly, the investment in new transmission is likely to reduce costs and therefore, will have a net savings for ratepayers. The reason for the counter intuitive result is because of the operation of ISO rules and a reduced dependence we will have on an ongoing basis on NStar

5. Thanks for the response Ashley Brown. That sounds good – net savings, but it is indeed counter intuitive. It also reminds me a little of those internet scams in which an entity offers me money sometime in the future (“net savings”) if I will just send them my bank account number and routing number (the $34M borrowing authority). Of course that’s unfair and it’s only meant as an attempt at humor, but I must say that’s what this sounds like to me.

   If this project eliminates the monopoly status of one for-profit corporation (in this case, Nstar, although I am speaking generically) to transmit electrons to BMLD, that may be a good thing.

   For me personally, I prefer to pay a higher unit cost for something of quality but use less of it, and thereby save money too.

   Here’s another K.I.S.S. analysis.

   You mention transmission costs. BMLD bills residents $0.02 per kWh for transmission. I assume BMLD is not subsidizing the transmission expense that Nstar bills it. Then take 10,000 residences each using 10,000 kWh per year, for a total of 100 million kWh per year, for a total transmission cost of $2M per year. So BMLD is asking residents for borrowing authority of $34M in part to save some fraction of $2M per year.

   The total bill per kWh for residential electricity in Belmont is approximately 8 times the transmission cost. So that’s a long and powerful lever, that factor of 8. If residents learned to use less electricity, they will be saving 8 times as much as that transmission cost on every kWh that they don’t use. They also will be leaving that precious fossil fuel in the ground rather than converting it to CO2. Do we really want to drill more natural gas wells so that we can keep our TVs on standby 24/7?

   The old saying comes to mind, “give a person a fish and they eat for a day; teach them to fish and they eat for a lifetime.” And in this case they can teach their neighbors to fish too. But it’s even more powerful than that, because whereas fish stocks can be over fished, i.e. depleted to extinction, being “electrically conservative” cannot deplete any finite resource.

6. I admit to only now reading the documentation that Will linked in his initial post. Here’s my own opinions itemized below. I find one good item (#2 below) and many bad items.

   1) In the discussion, there is a disconcerting mixing of issues that makes me feel a sales pitch is in progress.

   2) If this project eliminates the monopoly status of one for-profit corporation (in this case, Nstar, although I am speaking generically) to transmit electrons to BMLD, that may be a good thing. This issue alone might trump all the rest below, because residents of Belmont and especially McLean Hospital should expect to not have too many blackouts due to poor planning. Although this issue of reliability has been mentioned in the report, it has not been the mainstay of the sales pitch.

   3) Peak demand (MW) and total annual electricity usage (kWh) are two related but very different issues. First, their units of measure are different. Total annual electricity usage (kWh) is critical to CO2. Peak demand (MW) should be easier and less expensive to solve on demand side by time multiplexing high power devices (air conditioners and dehumidifiers) than increasing peak transmission capacity. For example, a basement dehumidifier does not need to run between noon and midnight, but I bet that nearly all of them run without a $10 timer to prevent that behavior. (And I bet most of them run much more than is necessary.)

   4) As far as I can discern, the pitch is that this project will lower electricity rates by reducing transmission expense by $1M/yr (from the PDF linked far above). But the $34M comes from somewhere and has a debt to be serviced (@3% interest rate, that’s $1M/yr in taxes, so a wash compared to the transmission expense abatement, ignoring payment of principal), presumably by tax payers, and presumably that means Belmont residents. (I admit that there might be a grant from MA or Uncle Sam, but if so, then there’s the moral quandary of asking outsiders to subsidize Belmont’s peak consumption). Taxes will have to be raised across the board, so that the largest users of electricity can save the most; here I have presumed that the proposed transmission cost abatement will be allocated on a kWh basis, just as it currently is assessed. So the grandmother on a fixed income and one window AC unit in her bedroom that (because of her Yankee heritage) operates it only on the very hottest afternoons is asked to subsidize (with her higher taxes) the yuppie family’s big new home with central air conditioning (that supposedly MUST run whenever the unenlightened thermostat triggers)? Sorry for the melodramatic picture, but what’s untrue about it? Stated in those terms, on this issue, each side of the political spectrum may have problems with this sales pitch. The right won’t like higher taxes and the socialism of billing everyone, rather than making the market set prices (i.e. letting consumers pay for what they use and when they use it). The left won’t like rewarding and enabling higher consumption of fossil fuels.

   5) A related ethically-challenged aspect of this proposal is that everyone is billed the same flat rate (via taxes) to solve a peak consumption issue. It is ironic that for a tiny fraction of the time during the year (a few days in August), Belmont residents are being asked to pay every day in their taxes. [ In some cities in the old days, real estate taxes were based upon how wide the frontage of a row house had on the street. That created incentives to build very thin and deep homes, sometimes laughably so. ] If peak consumption is a problem, address the problem directly. The unit cost of the proposed project, estimated above at $3,400 per residence, should provide meaningful incentive to (A) reduce peak usage (MW) and (B) overall usage (kWh), (C) to increase local production (e.g. a local financial incentive for solar panels), (D) time multiplexing, (E) conservation (e.g. window shades, insulation, ceiling and attic fans instead of AC), and (F) consumer education.

7. petermccullough says: …But the $34M comes from somewhere and has a debt to be serviced (@3% interest rate, that’s $1M/yr in taxes,…

   As I understand it BMLD needs authority from Town Meeting to borrow the money but the cost will be repaid by the rate payers. That means the net saving from not paying NStar to deliver the power offsets some or all of the cost of the new transmission line and distribution network. That also means that those that conserve will pay (or receive a benefit from any savings) only in relation to their consumption and those that choose to consume more will carry more of the cost as they should. Other portions of the $34M are said to be for capitol improvements that BMLD needs to make anyway although I haven’t seen how much of the total cost that is. Getting favorable designation (i.e. PTF status)by the New England ISO gives BMLD more flexibility by eliminating a layer from the procurement process.

8. I just want to thank, Patty, Ashley, Peter and Steve for this thoughtful exchange, so far. My role as legislator is limited on this. It’s a municipal decision. I am convinced that we can and should do much more aggressive power conservation and demand management in Belmont, but it sounds like there are other compelling arguments for the present proposal.

9. The proposed site for the substation in Flanders Rd is wrong for several reasons.
   1. It puts out of business 2 companies who currently occupy the premises.
   2. The town would lose the taxes, company spending, employment, and services generated by those companies.
   3. The proposed site is next to conservation wetlands.

   A BETTER ALTERNATIVE SITE
   1. Expand the existing 13.8kv substation on Hittinger St.
   2. The extra space required could be taken from one of the FOUR High School baseball practice diamonds, or the adjacent Town of Belmont facilities. The baseball diamond mentioned is currently partially used as a parking lot for school buses
   3. In doing this the town would not have to purchase any other property. It already owns the land.
   4. Or displace existing, successful businesses, a critical consideration in this economy.
   5. Thus savings on several points.

10. It seems like a solid plan fiscally and technically with the exception that it does hurt a few local business people. Not sure there is any evil here. You have a manager of the Light Department being proactive about a system near capacity. Do we need wait for rolling blackouts before responding? Leaning YES on this one.

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