As project costs for the world’s first smart-grid enabled city in Boulder soar, the Colorado Public Utilities Commission has stepped up oversight to help prevent runaway build-out costs and help protect Colorado ratepayers.

Back in December, the Xcel’s $11 million rate hike for Boulder’s SmartGridCity project was approved by the Colorado Public Utilities Commission (CPUC), but the regulatory body also indicated they wanted Xcel to prove the rate hike will serve the public interest and they would be increasing oversight of the state’s largest (and only) investor-owned utility, ordering the utility to file a “Certificate of Public Convenience and Necessity”, something that Xcel hasn’t yet had to do for the project.

Boulder’s SmartGridCity project has been hit by cost overruns, which, according to Jeff St. John at Earth2Tech, can be blamed on the rising cost of fiber optics. St. John wonders whether the cost overruns in Boulder will be emblematic of other smart grid projects in the U.S. and the world:

"Rumors that SmartGridCity was facing fiber-related cost overruns have been circulating for some time. The whole affair brings into question whether smart grid services alone can justify the cost of building out a fiber optic network. While many utilities have fiber optic networks installed, they’re usually limited to major transmission lines and end at big substations, rarely venturing out into neighborhood distribution grids."

Global demand for faster data transmission across broader bandwidth is undoubtedly going to create some unexpected cost increases like the one we are witnessing in Boulder. But one wonders if President Obama’s smart grid investments and increased stimulus spending will help take some pressure off an already-taxed fiber optics industry, or whether this is just a manifestation of smart grid growing pains.

Xcel has until late February to file its certificate of public convenience and necessity, and the CPUC could take six months or so to review.

Reprinted with permission from Earth & Industry