www.CenterPointEnergy.com/EnergyInSight August 2009 © 2009 CenterPoint Energy 91925 Smart Grid Application Summary This week, CenterPoint Energy, Inc. 9s electric distribution and transmission subsidiary, Houston Electric, LLC, o+ cially requested a $200 million clarge project d grant to accelerate the completion o+ deployment o+ more than two million smart meters by almost two years to mid 2012 as part o+ its Advanced Metering System (AMS) and to install the rst phase o+ its grid hardening and automation project called the Intelligent Grid (IG). Increasing the reliability and sel+-healing capability o+ the company 9s grid is a national objective because a signi cant portion o+ the nation 9s critical energy and petrochemical in+rastructure is located in the company 9s hurricane-susceptible service area. Additionally, until its AMS is deployed, none o+ the 30 or more active Retail Electric Providers serving the company 9s electric distribution customers in the Texas deregulated market can o++er those customers dynamic pricing.
However, the expected array o+ dynamic pricing and additional pricing programs that should be available in the company 9s service area in the +uture will provide the Department o+ Energy with extensive data to measure the bene ts o+ Smart Grid in a competitive market. Fully completed, ... more. less.
CenterPoint Energy 9s Smart Grid will serve as a leading example o+ an integrated, cyber-secure, scalable, and replicable Smart Grid. And the company will expand and use its Technology Center to test various Smart Grid components, to +urther evaluate security o+ new technologies, and to educate consumers, vendors and other key stakeholders about the bene ts o+ Smart Grid Technology.<br><br> What is the maximum grant money fund available for this project? " The total available grant money that is available +or any large project is $200 million. How much will it cost?<br><br> " The total cost o+ the AMS and IG projects between 2010 and 2012 is approximately $640 million. " The total cost o+ AMS implementation between 2010 and 2012 is approximately $540 million, which has already been approved by the Public Utility Commission o+ Texas (PUCT). " The total cost o+ IG implementation is approximately $100 million, which will be considered as a part o+ our normal investment in the electric grid.<br><br> How will the grant money be used? " $150 million o+ the requested $200 million will be used to accelerate the completion o+ our advanced meter deployment to mid-year 2012 instead o+ the current anticipated completion date o+ rst quarter 2014. The remaining $50 million will be used to accelerate the implementation o+ the IG system.<br><br> " The company has committed to pay approximately $440 million or 69%. Smart Grid Team CenterPoint Energy 9s Smart Grid alliance includes IBM , GE , Itron , and Quanta Services . These team members have subject matter expertise, rst-hand knowledge o+ CenterPoint Energy 9s system, and the electric industry, and pro ciency in the Texas electricity market.<br><br> If approved, CenterPoint Energy anticipates the Smart Grid grant will: " Improve electricity reliability for the hurricane-susceptible Gulf Coast Region 3 Because the company 9s service territory is located in the heart o+ cHurricane Alley, d it is vital to equip its grid with Smart Grid +unctions that allow it to be more resilient, more reliable, and quickly restored in the event o+ outages. In the a+termath o+ Hurricane Ike in 2008, the Mayor o+ Houston +ormed a task +orce to study the massive electric outages caused by damage to the company 9s distribution grid. The Mayor 9s Task Force Report concluded that enabled Smart Grid +unctions would allow a grid damaged by major storms and other large natural disasters to be returned to service up to 50% +aster.<br><br> " Provide reliable power for components of the nation 9s critical energy and chemical infrastructure 3 The area where the company plans to initially implement its IG encompasses much o+ Houston 9s critical in+rastructure, including the Texas Medical Center, large central business districts, +our universities, the Port o+ Houston, Houston 9s 911 call and emergency centers, Harris County Transit Control Center, and other critical and essential +acilities. The Smart Grid can reduce the costs associated with power interruptions. When outages do occur, CenterPoint Energy 9s IG will reduce the duration.<br><br> Substation and distribution line monitoring equipment will be able to accurately locate permanent +aults as they occur. This in turn will speed recovery since the repair crews will not be required to search +or the location o+ an outage and can begin CenterPoint Energy Stimulus Application Facts repairs much sooner. The sel+-healing +unctionality o+ IG will also reduce costs because the Distribution Management System (DMS) will be able to analyze data +rom the substation and line monitors and then develop recommendations or switching commands to isolate the +aulted section o+ line and reroute the consumers on undamaged sections back into service within seconds or minutes.<br><br> It is estimated that areas completed with +ull Smart Grid +unctionality will improve reliability by up to 30%. " Aid in the implementation of a Smart Grid in a uniquely competitive retail electricity market 3 There is a fourishing competitive market in CenterPoint Energy 9s service territory where end-use consumers may purchase electricity +rom any one o+ the Retail Electric Providers on the Power to Choose PUCT Web site. In this competitive environment, smart meter +unctions, such as the availability o+ dynamic pricing, will have positive e++ects on electricity pricing and consumer choice.<br><br> " Create a shovel-ready project that allows for rapid deployment of Smart Grid technology and job creation 3 Implementation o+ CenterPoint Energy 9s AMS and IG can provide over two million metered, end-users who consume about 17% o+ the electric power used in the state o+ Texas, with critical smart meter +unctions. Additionally, IG deployment can allow 530,000 Houston residents and certain businesses, commercial enterprises, and industries to receive the +ull span o+ Smart Grid +unctions through the company 9s initial IG deployment. Since March 2009, the company has already installed over 45,000 smart meters, along with supporting communications in+rastructure and computer systems.<br><br> " Increase job creation and retention 3 Accelerating the implementation o+ CenterPoint Energy 9s Smart Grid can create and retain thousands o+ new jobs across the nation over the next ve-to-seven years. " Give unparalleled ability to extend Smart Grid technology to others 3 CenterPoint Energy 9s advanced preparedness, scalable and replicable Smart Grid design, and its demonstration and testing +acilities a++ord the company a unique opportunity to extend its knowledge, experience, and technologies to a broader set o+ locations and applications throughout the country. CenterPoint Energy currently operates a Technology Center +or demonstrating to outside parties how the Smart Grid works.<br><br> The Technology Center provides a tactile consumer experience with simulated consumer-oriented portals to show the value Smart Grid o++ers in customer in+ormation and sel+-service. To date, CenterPoint Energy has provided education and Smart Grid demonstrations to more than 500 groups, including governmental o+ cials, utilities, industry representatives +rom around the world and area consumers. Benefits of AMS and IG " AMS 3 A+ter +ull deployment o+ over two million meters and 20-40 percent o+ CenterPoint Energy consumers taking advantage o+ REP o++erings o+ dynamic pricing, the company expects the total bene ts +rom its +ull AMS implementation to be in excess o+ $1 billion per year in Houston and throughout ERCOT.<br><br> " IG 3 The signi cant bene ts o+ IG technology will fow +rom increased electricity reliability and the ability to rapidly restore power +ollowing outages. The monetary bene ts o+ such increased reliability are certain to be signi cant, especially considering the critical energy in+rastructure within the greater Houston area. <br><br>