How Xcel Energy Plans to Help Customers Cut Their Electric Bills

Revamping the electricity grid—a focus of the $787 billion stimulus package that President Obama signed in February—is a strategic challenge for utility companies like Xcel Energy. Meeting that challenge, says Xcel CIO Mike Carlson, will depend on information technology.

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Xcel Energy

Xcel is in the middle of a $100 million pilot, SmartGridCity, that aims to give customers IT-based tools for managing their electricity consumption. During the past year, Xcel has begun equipping up to 45,000 homes and small businesses in Boulder, Colo., (as well as the distribution grid) with sensors that will monitor the energy usage of its customers. The sensors transmit this information to an online dashboard that customers can view, then use to make decisions about how much power they want to consume and when. As consumers cut their power use (and bills), less power will be wasted, reducing Xcel’s costs and ultimately its carbon footprint. The project is among a handful of IT-based electricity management projects in the United States, says Doug Washburn, a Forrester Research analyst.

It’s a big change for Xcel, which like most utilities interacts with customers only when there’s a power outage or a billing problem. That’s where IT comes in. “I believe that there are very few places within the company that know and understand business, process, technology and data as well as [our] IT shop does,” says Carlson. Washburn agrees. The new dashboard “is what makes SmartGridCity smart,'” Washburn says, but the company will also have to spend more on hardware and business intelligence tools “to make sense of this new information.”

Carlson and his team developed and deployed the SmartGridCity project, to validate business assumptions, identify obstacles and define future costs and service limitations. “We basically led the whiteboarding of the business [plan] and technology applications,” Carlson says. These conversations culminated in a November 2007 presentation to Xcel Energy’s board of directors recommending the pilot.

Xcel then teamed with Accenture to evaluate the utility’s IT infrastructure and determine how to support the initiative. The company has been able to manage the pilot largely with its existing systems and network, says Mike Donohue, senior executive with Accenture’s North American utilities industry group.

In December, Xcel will complete data collection from the pilot. Carlson and his team will evaluate the costs and benefits and determine the strategy for a larger deployment. Among the decisions he anticipates: How frequent feedback on energy usage needs to be to constitute “real time” data. A future upgrade to Xcel’s billing system will also take SmartGrid plans into account.

The next steps will be contingent on their findings, Carlson adds—and how much, if anything, they receive from the stimulus package.