Randy Oswald, Sioux Valley Energy Load Control Technician, installs a load control device near a standard meter at a home.

By Ryan Woodard and Sioux Valley Engery reports

Sioux Valley Energy (SVE) located near Colman will receive up to $4 million in federal stimulus funds to implement smartgrid technology throughout its service territory, it was announced last week by the U.S. Department of Energy (DOE).

Sioux Valley Energy, a nonprofit, rural electric cooperative, is headquartered in Colman. Co-op officials say that investment in "smart" technology likely will save its South Dakota and Minnesota customers as much as $4 million a year in reduced energy costs.

Sioux Valley Energy distributes electricity to more than 20,000 member-owners in Moody, Minnehaha, Lake, Brookings and Kingsbury counties.

Sioux Valley Energy plans to utilize the stimulus funding to install 23,000 smart meters, said Don Marker, CEO and general manager. The new technology will allow the cooperative to implement "dynamic pricing models" such as critical peak pricing and time-of-use rates, and it will automate meter readings.

A two-way communications link between the consumers' meters and the cooperative will send price signals to consumers, providing them with individualized energy use information.

This will help consumers better understand how they use and conserve energy, Marker explained.

“They’ll be able to monitor on a real time basis how their electrical use changes through the day, which is something they haven’t been able to do in the past,” said Sioux Valley Energy director of communications and government relations Carrie Law.

She said people will potentially have various options available for monitoring their electricity use, such as checking it on the Internet, consulting an in-home monitor and receiving text message or emails.

“There’s a lot of different options that people could utilize, depending on what their lifestyle is like,” she said.

The "smart" meters will also improve outage response and restoration time providing instantaneous outage alerts to the cooperative.

“We’ll know right away if there is an outage,” Law said. “It’ll give us better outage information, which is important.

The total cost of the SVE project is estimated at $8 million.

The remaining $4 million not covered by the grant will be paid for through electrical rates, Law said. Customers may see a rate increase next year, but rates have increased during the past few years and will likely increase during the next several years anyway due to increased power supply costs, she said.

The energy company’s meters were due for replacement anyway, and the grant will allow SVE to provide the newest technology, according to Marker.

"The federal funding couldn't have come at a better time," Marker stated. "Our current metering system is at the point of needing to be replaced, and the stimulus funds will allow our members the opportunity to have the latest technology available to them."

He added, "Smart grid technology essentially puts more control in the hands of our member-owners. It will give them detailed information on their energy use, which will help them make informed choices of how and when they use electricity."

Smart grid technology will help reduce metering costs, individual member electrical use and peak demand, which may help offset the need to build additional generation in the future.

Co-op specialists estimate that avoided generation and infrastructure costs could result in cost savings of up to $4 million a year.

Law said SVE is already in the planning process of implementing the new smart meters. The first step is adding new infrastructure to the electricity substations.

She said customers can expect to start seeing the new meters late next summer.

“We’re going to try to get started as soon as we possibly can,” she said. “Our plan is to have it completed in less than three years, start to finish.”

Sioux Valley Energy's award was one of two in South Dakota. Black Hills Power Inc. in Rapid City will receive nearly $5.6 million to install 69,000 smart meters, along with the communications infrastructure, IT software and equipment necessary to operate a fully functional smart grid system in its service area.

The DOE awards to the South Dakota utilities came as President Barack Obama unveiled a major initiative in which the federal government will spend $3.4 billion to modernize the nation's power grid. The investment, part of the American Reinvestment and Recovery Act, will be matched by industry funding for a total public-private investment worth more than $8 billion. This is the largest single smart grid modernization investment in U.S. history, funding a broad range of projects that will ease the nation's transition to a more efficient and more reliable electric system.