Fractals of Change

The e-state; More for Less

Technology can make government both more effective and much cheaper to operate. Does this sound too good to be true? It's not; it's a fact.

Bureaucracies in the private and the public sector were designed around bureaus, places that records were kept. It used to be that you had to go the branch of the bank where your account records were to make a withdrawal; other branches didn't know what your balance was. If you needed to interact with the government bureaucracy, you had to go to the office where your records were kept; otherwise no one would be able to deal with you. To make life even more complex, your tax records might be in one office; your fishing license in a second office; and your property information elsewhere. Sound familiar?

But once records become electronic, they're wherever you need them to be. It doesn't matter whether they're in a corporate data center, on a disk in a state office. or somewhere off in a huge computer center operated by Google or Amazon (technically this is called being "in the cloud"). When you need access to them, they're where you are. You can withdraw money from any ATM (at least if you don't mind fees); you can charge at any store; and you ought to be able to go into any government office to do whatever government business you need to do.

Spurred by shrinking budgets and enabled by cheaper and cheaper technology, Vermont is moving away from paper and towards electronic records – towards becoming an e-state. As this migration continues, costs'll come down and you'll get better service.

Currently many agencies which deal with the public have regional offices to make it convenient for you to get to them. Because, in many cases, your files are kept in your regional office, you can only do business in that office. Moreover, different agencies have different files and different specialties; so, in order for there to be an office of whatever you need near you, there have to be lots of offices in each region. In the cases where you can do business by phone, you have to be sure to call the office near you. If there's a line of people waiting at your local office, you wait, too, even if there are office workers with no clients at some other regional office of the same agency.

But flash forward to your records living in the cloud. Now it doesn't matter which regional office you go to or call, your records are accessible when needed. Moreover, the state doesn't need as many specialized offices because any kind of record can be retrieved at any office and much of the specialized expertise is available online. So the state can have less offices (less cost) and yet it is more likely that there'll be an office which can help with your particular case near you whether you're at home or on the road (better service) because you can go to any office.

If all the workers in one office are on the phone, calls can go to another office. The callers records are wherever they need to be.

But, you're asking, if my records can be wherever I am, why do I have to go to an office at all? Good question. More and more often you won't have to. Nor will you have to wait for mailed documents to go back and forth. Just as we can renew our car registrations online, we'll soon be able to transact most of our business with the state from applying for a permit to getting a fishing license to getting benefits in time of need. It costs state government less to do business online; it's usually better, faster, and more convenient service for you. Doesn't mean regional offices will all go away; sometimes we all need inperson help. But this switch to web-based government, just like the switch to web-based flight reservations and banking, means better service to clients at lower cost to the service provider. Not too good to be true.

Fiber to the Neighborhood

The Vermont Telecommunications Authority (VTA) has asked the Vermont State Legislature for $5 million dollars of capital for "middle mile" infrastructure; the request was included in Governor Jim Douglas proposed capital budget. If appropriated, this money will be used along with the $40 million in revenue bonding authority the VTA already has to build radio communications sites for cellular service and wireless broadband and to bring fiber connections to Vermont neighborhoods. Most of the cost of this infrastructure will come from the private sector; some may come from stimulus grants; but the capital appropriation is needed to get moving sooner rather than much later. If we wait long enough, private money alone will probably build towers and fiber everywhere. Waiting, however, means not only a lack of economic development in the places where communications are still sub-standard, it also means the whole state loses out on the benefits of 100% connectivity (more on that argument here). This post is about the importance of fiber to the neighborhood.

When your phone company tells you that you can't get DSL – which is brought to you over your copper phone wires, it's probably because there is no fiber in your neighborhood.

When your iPhone slows to a crawl, it's probably because there's no fiber to your neighborhood cell tower.

If you don't have a nearby cell tower at all, you probably won't get one until there is fiber in your neighborhood.

Fiber optic cable caries the vast majority of the world's data (voice is just a small part of data) almost everywhere that data goes. Incredible amounts of data can speed incredible distance on light waves channeled through thin fibers; the bundles of fiber can be coiled; they can turn corners; and the light stays in the fiber and gets where it's going. Except in big cities and modern development, most of this fiber hangs from electric transmission poles; some travels through conduit; some is in sewer pipe; and some just lies on the ground. The modern Internet simply wouldn't exist without fiber optic technology.

Very few of us have fiber connections all the way to our homes. Fiber links telephone company central offices (and some remote locations); but copper wires carry voice and data from the end of the fiber to our phones and computers. Copper works for carrying data short distances; it's not very good for carrying it far. That's why you can get fast DSL in the center of town and can't even get slow DSL at the end of the road.

Cable companies use fiber to bring their television channels and data services to your neighborhood. They then use coaxial cable (cheaper to splice into and to connect to devices) to carry a signal to and from your house. When a new town gets cable service, first it gets fiber to the neighborhoods.

Cell towers and the antennas of wireless internet service providers are better and better for transmitting larger and larger amounts of data for short distances. But they have to be connected to the Internet. That connection is rarely by radio (although it sometimes is); in most cases the best way to assure that a tower has enough connectivity is to attach it to a fiber spur which is attached to the rest of the (mostly fiber) Internet.

A key part of Vermont's telecommunications plan is to work with private companies to assure that there is fiber in every neighborhood. Remember, we have fiber already in most downtown locations – although perhaps not enough and perhaps not enough competition among fiber providers. We now need fiber in small towns and remote neighborhoods. It needs to reach all the way to our government offices (because they are now data factories and repositories and need to be reachable online); it needs to reach the schools, which will quickly become reliant on high speed broadband to bring courses from all over the world to local classrooms. The fiber needs to reach hospitals and even health clinics. And it needs to be close enough to your house so that copper, radio, or coaxial cable can bring reasonably fast broadband to your computer (and your television).

Some people say we should have fiber all the way to every house. Some people in Burlington and in the Springfield area do have fiber connections to their homes. Maybe someday we all will. If that happens, the fiber we're now building to neighborhoods will have been a needed step along the way. Meanwhile, fiber to the 'hood will help make sure all have at least adequate broadband connections even if some other technology connects the last mile.

More about VTA plans for last mile infrastructure is here.

Should Vermont Pay for Broadband Deployment?

"Does extending broadband access to the last unserved 5% of Vermonters really stimulate economic development?" one Vermont senator asked.

"Why should the State provide money to make that happen?" asked another senator.

Two good questions at a time when Vermont is struggling to close a $153 million budget gap and will have to stop doing some of the things it has traditionally done. Should we really be doing something new?

It was my job to answer these questions since I was testifying before a senate committee in support of Governor Douglas' proposal to use $3.17 million of federal stimulus money for a program called Backroads Broadband designed to make sure that the hardest to reach last 5% of Vermonters do get broadband access in the near future. (More about Backroads Broadband is at http://cto.vermont.gov/blog/backroadsbroadband. Currently about 85% of Vermonters have access to broadband; we think programs under way including some luck with competitive stimulus grants'll get us to 95%; that's why we're planning for the last 5%).

So does serving the last 5% really make a difference to economic development?

In my opinion, yes.

First of all, the unserved people are not spread evenly around the state; they're in clusters. In some areas there is no broadband availability at all. Who's going to open a new business in a place where they can't go online? How can potential workers in these areas work from home or learn from home if they can't go online? Given broadband, though, these are often places where housing is cheap and space is available at a reasonable price for new businesses. These are places where economic development is needed. These are places where economic development can occur – but not without broadband.

Second, economic development depends on an educated workforce and schools to which potential new employers want to send their children. If even a small percentage of the kids in class can't get online at home to do their homework, then teachers won't be able to give online homework. If teachers don't give online homework, kids won't be prepared for the world they're about to enter. Potential immigrants to the State, who might start home businesses or larger ones and want to live in this beautiful place, aren't going to come if the schools aren't good enough for their kids.

Third, the State needs lower taxes and a higher tax base to succeed economically AND socially. Like a business which must cut prices to stay competitive, Vermont must find ways to cut costs to support a lower price for government services. E-government, delivering state services online, makes it possible to deliver better services at a lower cost. But, if any significant part of our population can't get online, we'll have the cost of developing new web-based service delivery systems PLUS the cost of maintaining traditional office-visit-based systems. We've got to be able to assume in the near future that the same percentage of people who can make a phone call from home (by cell or landline) can also go online.

But should Vermont spend money –even if it came from the feds it's still our money – in order to accelerate broadband penetration?

Again in my opinion, yes.

Government needs economic development to generate tax revenue to support government – and, of course, the people of the state need jobs. Government does all sorts of things to encourage job creation including tax breaks, low interest loans, and direct grants to individual businesses. Many economic development policies depend on government being able to pick the "right" businesses to invest in – a dicey proposition at best. But we do all these things because we need economic development.

What government does best is build or incent the building of the infrastructure needed to attract economic development. This was and is true for railroads, canals, ports, electrification, telephone, and roads and much, much more. Often government doesn't have to invest as much in infrastructure in urban areas where the economics are good as in more rural areas; but a whole nation, state, or region benefits from good infrastructure and a good economy throughout. Government investment in infrastructure DOESN'T require being right about which business'll succeed; infrastructure creates opportunity and private capital comes in to take advantage of the opportunity. The good businesses succeed, the bad ones fail – but our investment in infrastructure is a winner.

You know the old saying about how it's better to teach a man to fish than to buy him fish sticks. Well, especially when times are tough, we need to make sure Vermonters can fish for opportunity online – all of us.

Backroads Broadband

We ARE going to get there from here. The Backroads Broadband Program, which was proposed by Governor Jim Douglas in his State of the State address to the legislature last week, is aimed at making broadband available to the last most-difficult 5% or so of Vermont residences, which are sparsely scattered along remote dirt roads or on the wrong side of signal-blocking hills and mountains. The proposed plan helps the economics of telecom providers that serve the very difficult to serve by accelerating the signup rate so that these providers can get a faster return on their investment than they would otherwise and so Vermonters get the advantage of being online sooner rather than later.

We currently estimate that about 85% of Vermont addresses have access to reasonable broadband (satellite doesn't count!). That number could rise to as much 95% assuming that FairPoint and Comcast complete the buildouts they are legally obligated to do and assuming that most of our broadband applications for stimulus money are granted (that's probably optimistic).

It's frustrating but the feds have been very slow to announce winners of the broadband grants. First they said they would do so in early November, then December. Come December they announced just a few percent of the national total and have only dribbled out a few announcements since then. Many telecom projects have been delayed this year as carriers wait to find out what they can get grants for. Stimulus announced but delayed has a contrary effect; it costs jobs and its costs progress. Soon there is supposed to be an opportunity to apply for a second round of broadband stimulus, but the rules for that haven't been announced. It's also hard to plan for the second round when we don't know the results of the first.

But, complaining aside, we need to move ahead to make sure broadband is available and adopted everywhere in the state. Rural economic survival depends on affordable broadband access as do the ability to deliver e-health, e-education, and e-government. Backroads Broadband proposes to use $3.17 million of flexible stimulus money (technically state fiscal stabilization fund or SFSF) that we know we have to assure that we're moving ahead in our most difficult areas.

Up until now providers who want to serve Vermont's rural areas have faced three obstacles:

1. Lack of affordable highspeed wholesale connections to the Internet in rural areas (like not having any Interstates or even state highways);
2. The high cost per residence of deployment due to the low number of residences per mile and difficult terrain;
3. Relatively slow signup in areas that have not previously had service both because of setup fees required for some technologies and because, when a whole community has gotten by without Internet, immediate signup is not as compelling as when all your neighbors are already online and posting stuff you want to see to YouTube.

Problem #1 is well on its way to being solved. VELCO, our statewide electrical wholesale transmission utility, is in the process of building 1200 miles of high-capacity fiber to pretty much every corner of the state. This is being done without state or federal money and should be done within two years. The $69 million Smart Grid grant awarded to Vermont and the $69 million of utility money that will match it will further improve our data backbone. A collaboration the Vermont Telecommunications Authority (VTA) is managing with wholesale providers to use this capacity should result in wholesale and commercial rates for Internet access in rural Vermont which are competitive not only with our own little cities but also with major metropolitan areas in the US.

Problem #2 isn't going to go away. We don't want Vermont to be either over-populated or flat. We've got to live with sparse population and tough terrain but we can't let these stop us.

Backroads Broadband addresses problem #3. As proposed, money will be available as an incentive to formerly unserved households to hook up quickly. The incentive is only available through providers who agree to cover 100% of an area; we don't want to leave even smaller and less economic scraps of unserved geography behind. Providers who do agree to full coverage will be able to offer qualified new subscribers either deeply discounted (maybe even free) first year service or a big break on setup costs; financing for this incentive will come from the VTA funded first by the SFSF money and, assuming the program is successful but a little more is needed, up to $1.83m of general funds from fiscal year 2012.

The Backroads Broadband Program is over after two years; the deadline itself will create a sense of urgency. Both for consumers and for providers, the message is use it or lose it. In two years, broadband should be everywhere. We should reach a critical mass of people online so that there is a compelling reason for almost everyone offline to actually get connected and so Vermonters can count on broadband for their own purposes and so the State can count on broadband to deliver services and for e-education.

Right now this program is just proposal although initial reaction to it has been positive. Legislation will be introduced to appropriate the federal money for this purpose (under Vermont law, the Governor cannot spend this money without a legislative appropriation). Hearings will indubitably be held by the relevant committees. You'll have a chance to comment for, against, or something else. Suggestions for improvement are welcome.

We are going to get there from here.

Vermont, Challenged and Stimulated

Now, when recovery from the worldwide recession is beginning, Vermont has an opportunity to emerge with a stronger economy, a cleaner environment, a broader tax base, and better jobs than we had before the downturn. We also face the enormous challenges of far too many Vermonters out of work, a state budget which was expanding at an unsustainable rate even before the recession, declining state revenues which will not return to bubble highs anytime soon, unfunded pension liabilities, the looming loss of hundreds of millions of dollars of budget bandaid from the Stimulus Bill (aka American Reinvestment and Recovery Act or ARRA), and a country whose national debt won't allow it to bail out the states (or anyone else) much longer. Oh yeah, our dominant telecom carrier is in bankruptcy too.

In my new job as Vermont's Chief Technology Officer (CTO), I'll be working on ways to use technology to seize the opportunities to overcome the challenges. Here's some of what we have going for us. Note that the opportunities go way beyond creating short term jobs; they build the infrastructure for a permanently stronger economy.

1. Most Vermonters are tough, resilient, and hard working.
2. ISO New England (the New England Power Grid) is financing a $53 million dollar buildout of high capacity data-carrying fiber by VELCO (Vermont's wholesale power transmission utility) as part of region-wide grid improvement. This fiber is not only the "state highway" path for the information which makes the smart grid smart, it also brings ultra highspeed Internet backbone affordably close to even the most rural parts of the state.
3. The Department of Energy recently announced a nearly $69 million competitive grant to Vermont utilities. This money will be part of a $138 million project, which, at its completion at the end of 2012, will give Vermont the nation's first statewide smart grid, smart meters for almost everyone, a very competitive cost of electricity, and opportunities to use clean electricity to supplant petroleum as both a transportation and a heating fuel. Just as the VELCO network and other fiber already in place are the state highway system for data, the information needs of the smart grid project should provide substantial funding for "town highways" bringing high speed Internet access all the way to our homes and businesses.
4. Vermont has already received one of the four first competitive broadband stimulus grants announced so far and may well receive funding for more projects when the rest of the grants are announced starting in December.
5. Regardless of future stimulus funding, a newly-revitalized Vermont Telecommunications Authority has $40 million of revenue bonding which it should be able to deploy quickly to achieve our goals of universal cell coverage and high speed broadband availability. The smart grid projects listed above and any stimulus broadband grants make a tough job much easier (but not easy).
6. There is $135 million of stimulus-funded low interest bonding available through the Vermont Economic Development Authority for credit-worthy businesses that want to expand in a state which is about to have both excellent telecommunications and relatively low cost energy – and is also a great place to live. The bonds must be issued by the end of 2010!
7. There are $90 million of low interest stimulus bonds available to Vermont municipalities through the Vermont Municipal Bond Bank to make needed upgrades at lower cost. Again bonds must be issued by the end of 2010!
8. A very high percentage of our state government workforce is due to retire in the next few years. This can either result in poor service and high costs if we don't prepare or substantially lower cost of government and better outcomes IF we use technology and the universal broadband adoption to improve the way state services are delivered in a way which was never possible before.

 

As CTO, it's my job to coordinate to assure that we actually do get the synergies between smart grid, broadband, and cellular coverage that are theoretically possible. It's also part of the job to assure that state government is using new technologies like smart grid for lower energy costs and broadband and the web to provide better state government at much reduced cost.

Vermont’s Broadband Recommendations

Which broadband grant applicants does Vermont like or not like? That's the question the National Telecommunications and Information Administration (NTIA), which is the part of the US Commerce Department and is charged with distributing some of the stimulus funding for broadband, asked the Economic Stimulus and Recovery (ESR) office, which has the responsibility for answering such questions in Vermont.

   

The American Recovery and Reinvestment Act (ARRA or "the stimulus bill") requires NTIA to consult with the states. Originally NTIA said it would do a preliminary screen of applications, then give the screened list to the states. When they saw how many applications there were, however, they decided to give the whole unscreened list to the states – which is what we'd asked them to do in the first place. Trouble is we're not sure how much attention they'll pay to our recommendations. They made clear that they would neither accept nor reject an application purely on our say so.

   

Just to make things a little more confusing, we are only asked to look at those applications submitted to NTIA. The stimulus bill also gave money to Rural Utilities Service (RUS, part of the US Agriculture Department) to finance broadband. RUS is coordinating with NTIA and many, but not all, applications were made jointly to RUS and NTIA. However, RUS is not required by the law to consult with the states so it isn't going to do so.

   

Vermont ESR was well positioned to look at the applications since we had coordinated the preparation of a set of applications statewide which could, at best, result in broadband coverage in Vermont expanding to at least 95% of the residences in the state. We recommended those applications when they were initially submitted. However, only four of these coordinated applications were applications to NTIA (two other were RUS only); so we only got to opine on the four (but we snuck in a good word for the RUS applications just in case).  These four applications span the three separate categories in which NTIA plans to fund projects:  Infrastructure (including both last mile and middle mile applications), Sustainable Broadband Adoption, and Public Computing Centers.

   

The four applications which got our highest recommendation because of their importance and synergy were:

1.  A last mile application from local carrier VTel to offer Wireless Broadband to serve unserved areas of southern and central Vermont and to upgrade its existing service in the Springfield area to very modern fiber. (Note: VTel proposes to use newly-available 700 MHz spectrum, which is old UHF TV spectrum now available due to the transition from analog to digital broadcasting.)
2. A last mile application by FairPoint to serve unserved portions of the very rural Northeast Kingdom. Even though FairPoint is having financial and other difficulties, the assets they propose to build are badly needed by the residents and businesses of this area.
3. A sustainable broadband adoption application by The Vermont Council on Rural Development. Their proposal is to help overcome obstacles to broadband adoption in newly-served communities such as lack of training, lack of equipment, lack of money, and lack of relevant local content. Greater adoption obviously means more benefit from any deployment; a higher adoption rate also improves the difficult economic of rural broadband deployment.
4. A public computing center proposal by the Vermont Department of Libraries aimed at assuring that libraries are well-equipped in areas where broadband is not widely available. This both helps mitigate (but doesn't solve) the availability problem and builds a user base for broadband when it does arrive.

   

We recommended two other applications as well: 

1. A middle mile application by TelJet Longhaul, LLC which, if funded, will improve backbone connections to and from Boston and within Vermont and significantly increase bandwidth, redundancy, and wholesale and commercial broadband competition in parts of the state.
2. A sustainable broadband adoption application by Health Care and Rehabilitation Services of Southeastern Vermont, Inc that proposes to use broadband resources to mitigate the chronic shortage of mental health professionals in the area.

Although we like to be positive, we recommended AGAINST many applications including all proposals to use satellite service to provide broadband. Although satellite is better than dialup, it's not good enough to meet the broadband needs of Vermonters and other rural Americans. We don't think Hughes Network Systems and EchoStar should be grabbing off the available grant money to build substandard solutions. Most of the rest of the applications we recommended against were national proposals that claimed to bring benefits to Vermont but didn't substantiate that claim.

   

You can read our full recommendation to NTIA at http://recovery.vermont.gov/broadband#staterecommendation.

Broadband Stimulus in Vermont

Grants.gov kept crashing on August 14, the deadline for submitting applications for broadband stimulus funding; not to worry, the feds extended the deadline by six days – and even then had to allow submission of attachments to the application on CD by mail since their systems weren't yet stable by the new deadline.

Nevertheless Vermont organizations managed to file a set of applications which, if funded in the entirety, will leave less than 10,000 homes out of 242,000 without access to broadband AND will give us a very good start on attacking other obstacles to broadband use like lack of computers, training or money. The goal of SmartVermont, our overall plan for discretionary stimulus money, is not just universal broadband availability; it's universal adoption so that applications like e-health, e-education, and e-energy (smart grid) can depend on broadband connections in every Vermont building on the electrical grid.

Five Vermont organizations applied for over $130 million of stimulus grants and loans for last mile broadband projects. Technologies proposed by the applicants include fiber to the home, DSL, and wireless. There is no guarantee that all of these (or even any of these) will be funded. We think (and hope) that these applications will have an advantage nationally because Vermont began a broadband mapping effort several years ago and the Vermont Office of Economic Stimulus and Recovery (ESR, my department) was able to provide authoritative maps to be submitted with applications which demonstrate to the anonymous grant application reviewers that these proposals do, indeed, meet the stimulus requirement of bring service to the unserved. ESR also worked with the Department of Information and Innovation (DII) to coordinate broadband support plans for community anchor institutions like schools, hospitals, and government offices and get letters of support from those organizations for the applicants who promised to provide the organizations with high-capacity low-cost connections to the fiber backbone being built statewide by VELCO, the state's transmission utility. Applicants get extra points for supporting these institutions; the institutions, needless to say, need to get connected.

The Vermont Council for Rural Development requested $2.5 million for a sustainable broadband adoption program to help assure that Vermonters in 24 pilot communities have the equipment, training, and motivation to use broadband. This effort will focus on towns where broadband has recently become available or is just becoming available to speed up adoption so that broadband capabilities can quickly become part of community life. Also, the higher the adoption rate in a local community, the better the business case for the provider. We don't have as many homes per mile as more urbanized areas; but we can mitigate that economic disadvantage by having a higher percentage of homes which sign up. The Department of Public Service (DPS) and the State Colleges both helped with preparation of the sustainable adoption grant request.

The Vermont Center for Geographic Information applied for a $1.96 million grant to continue and extend Vermont's broadband mapping effort. Extended mapping will go beyond advertised claims to verify speed and quality of service down to the individual structure level. It will also be useful in making sure that successful last mile grant recipients deliver what they've promised. We are reasonably certain this application will be funded since the feds have said they plan to grant one such application in each state.

Recognizing that there are communities and families who don't currently have broadband or the equipment to use it, The Vermont Department of Libraries applied for 80% federal funding of a $754,000 public computing center project – basically computers in libraries. The Edgar May Health and Recreation Center in Springfield filed its own $4 million request for public computing center funds.

There is certainly no assurance that all of these Vermont applications will be funded. The funding agencies – the US Department of Agriculture and the Commerce Department – announced that almost 22,000 applications totaling nearly $28 billion were filed nationally; this is seven times the amount actually available for this round. The agencies plan to accept another round of applications by the end of this year and one more in spring, 2010.

ESR has begun work on a plan to make sure that the remaining Vermont households which were not covered by applications in this round will have applicants willing to provide service in the next round. As soon as preliminary results from this round are known, which could be as early as mid-September, any areas where applications were unsuccessful will be added to the to-do list. The goal remains 100% broadband availability AND adoption.

 

 

Vermont Utilities Unite to Seek $66 Million in Smart Grid Funding

All 20 Vermont electric distribution utilities (the people you buy electricity from); the transmission utility, VELCO, which brings electricity to them; and the efficiency utility, Efficiency Vermont, whose role is to reduce demand, have united to design a single $133 million plan for implementation of a "smart grid" in Vermont and have submitted a joint application to the US Department of Energy for stimulus funding to cover 50% of the cost. The Vermont Department of Public Service and Office of Economic Stimulus and Recovery helped with coordination; the project had great support from Governor Douglas, Senators Leahy and Sanders, and Congressman Welch; but the heavy lifting was done by the utilities.

This is an extraordinary collaboration for a very good cause; if this project is funded, Vermonters will have the benefits of a smart grid five years sooner than we would otherwise. I'm not aware of this sort of coordinated state-wide application from anywhere else, which is one of the reasons why I'm optimistic that it'll get funded. However, it is in competition with other grant requests nationwide for a pool of $3.4 billion dollars, which almost certainly is NOT going to be enough to give all applicants everything that they ask for; so this is no sure thing.

The project is called eEnergy Vermont because smart grid means using digital technology to make better use of energy resources than was ever possible before. For consumers the smart grid means better information about our energy use and much better control over it including substantial opportunities to save money by using electricity when it is cheap and shunning it when it is expensive as well as better reliability. For utilities the smart grid means an opportunity to cooperate with their customers to reduce expensive buys of peak electricity, avoid the need to build as much generation and transmission capability as would otherwise be necessary to deal with escalating peaks (the grid must be sized for peaks), and lower operational costs which include but go way beyond the obvious cost of sending someone out to read your meter. The distributed small sources of renewable power popping up around the state are better used and therefore more valuable if plugged into a smart grid. For the country a smarter grid means reduced reliance on foreign oil and lower CO₂ emissions as well as a stronger economy because of lower energy costs.

The communication backbone for eEnergy Vermont is a 72 strand optical fiber network that VELCO is building to every one of the 270 electrical substations in the state. Engineering for the backbone is already underway, funding has been obtained, and it will be built regardless of whether or not the stimulus grant is obtained (but we think that having this fiber available for eEnergy will help us obtain the grant). This same network is also the backbone for much of the state's broadband plan (stimulus grant applications due 8/14), eEducation, and eHealth (applications due later). In other words, the same communication infrastructure which carriers meter readings from substations to utilities, delivers electrical use and price information to consumers, and supports substation automation also will be the way many of us access Internet services, the path for transmitting electronic health records and connecting monitoring devices from home to hospital, and will provide gobs (technical term) of reasonably-priced bandwidth to schools and libraries.

A smart grid is necessary for Vermont and the nation's future. Suppose that next year plug in electric vehicles are available from a number of manufacturers, some at a reasonable price. If our Prius population is any indication, Vermonters will start to snap them up for environmental reasons even before they are strictly justified by economics. If we do that and plug them all into a dumb grid when we get home at 6PM, the grid would simply go psst! (another technical term) and not be able to handle the load. But, if these are smart cars or plugged into smart outlets and there is a smart grid behind this all, we'll fill up with electrons when they're very cheap in the middle of the night AND when the transmission bandwidth is available to deliver them to us. An added benefit here in Vermont is that we can buy more very clean, very green electricity from Hydro Quebec so long as we do that when transmission capacity is available; so we will have displaced oil with hydro power as a transportation fuel.

55.5% of Vermont homes are heated with oil and another 14% with propane. Electric storage heat, which was once in fashion and then not, is much more practical with a smart grid when you can assure that you don't burn fossil fuel at a power plant to create heat to create electricity which is then converted to heat again in the home with lots of loss along the way. With a smart grid utilities can offer way off-peak interruptible rates, which would, even at today's relatively low fuel costs, save $750/year for the typical family using propane heat (after they buy the electric storage heat setup which is probably less than $4000 installed). The trick for many will be to keep the propane furnace as backup in case there's either a power outage or a few days of high electricity prices in a row (all switching automatic, of course). The $750 savings was calculated assuming that electricity only provides 75% of the heat required and the rest still comes from propane. The economics are not as good for conversion of oil heat today – just above break even on fuel costs; but are likely to get much better as oil prices climb faster than the price of off-peak electricity. If our homes are heated by hydro power, that's a lot of oil we don't buy and a lot of CO₂ we don't produce.

It's not an exaggeration to say that smart grid enables the energy future Vermont wants to have. We'll get there sooner rather than later – and be a great example to the rest of the country – if this grant is granted.

 

Broadband for EVERYbody

We used to think it was enough to make broadband accessible everywhere. That's no longer good enough. We now need to make sure that everyone actually has broadband in his or her residence and business. Everyone! (voluntary cave dweller excepted). Our goal in Vermont is to combine stimulus money with private investment and state bonding authority to move us quickly not only to 100% broadband availability but 100% broadband penetration.

The electrical system of tomorrow, the health care system of tomorrow, and the education system of today all depend on universal broadband penetration. Oh yeah, communication, commerce, and entertainment all need broadband too. So does e-government (coming soon) and research.

The electrical system of tomorrow will be smart. That means demand, supply, capacity, and outage data flow unimpeded and in near realtime from meters to utilities and back to consumers and generators. Much of this data flow is machines communicating with other machines. Some information flow is back to consumers both large and small so they can control their energy bills by using electricity when it's abundant and cheap and shunning or selling it back to the grid when it's rare and expensive. Taking advantage of the smart grid requires a broadband connection.

Part of e-health is electronic health records. Better information means better, cheaper, and less mistake-prone care. But we can't replace paper records with electronic ones until we can be sure that very doctor's office and place of treatment is online with enough bandwidth for bandwidth-hungry objects like x-rays. In the case of home health care, the place of treatment is the home. A home health worker needs the same access to medical records and the same ability to update them that a doctor or a hospital does. The home of the future will have health monitoring devices when needed. Homes need to be online for the delivery of health care.

When I was in school a million years ago I was taught to do research in the Reader's Guide to Periodical Literature. That was then and this is now. Students need to know how to separate the wheat from the chaff on Google and wikipedia; their homework needs to be online just as mine was in the library. But a teacher can't responsibly give online homework to a class if even a small fraction of the students don't have the equipment and connections to get online when they go home. We can't reinvent pedagogy the way we need to until we know that all students have broadband connections – and that schools have scads of bandwidth

So everyone needs to be online. Geography can't be an obstacle but neither can poverty, lack of equipment, or lack of training.

The platform for SmartVermont – the Vermont we hope to build with stimulus money, State money and bonding authority, and private investment – is universal broadband penetration. The first application on that platform will be smart grid, e-health, and e-education. With lots of hard work, some luck, and our fair share of federal (our!) dollars, we can build that future for ourselves and our children.

Is Vermont Moving Fast Enough?

My last post complained that federal agencies are not moving quickly enough to make the rules and give out the money for competitive stimulus programs in crucial areas like broadband and energy. Getting these projects under way in the this year's construction season is going to be a problem.

So how well are we doing here in Vermont at putting ARRA (American Recovery and Reinvestment Act aka the stimulus bill) money to work?

We've done a good job of getting highway projects underway. It's taken us slightly longer to sort out the priorities for water projects but we're getting there. We can't make our own rules for alternative energy and energy efficiency and some economic development programs until both houses of the Legislature and the Governor agree on a budget (hopefully'll happen by the end of this week). With hindsight I wish that I had pushed for separate legislation to get some of these projects going faster; but it's not clear whether that could've happened or even that the Legislature should have looked at a budget for ARRA money out of context of the rest of the state budget.

The Douglas Administration has proposed that large amounts of the ARRA money which has been allocated to the state by the Department of Energy be spent for alternative energy and energy efficiency projects. The intent is to distribute this money through open processes –either competitive or first come, first served for eligible projects – depending on the anticipated demand for a particular program. The idea is to make sure that the most effective projects are the ones that get done.

We can't write the precise rules for these programs until we know what the Vermont legislature finally authorizes. But we know we have to get the rules written and the awards made quickly to take as much advantage as possible of this year's summer construction season, put people to work, and quickly start reaping the long term benefits of less dependence on imported fossil fuels. You should judge us by whether we meet these goals.

We in Vermont decided to go ahead and prepare for the competitive ARRA broadband, smart grid, education, and e-health awards even in the absence of final regulations from Washington. It'll probably turn out that we've "wasted" some of this work when we see the rules under which grants are to be awarded. We rushed to be ready to file applications for broadband and smart grid grants as early as the beginning on May; looks like we didn't have to move quite that quickly. On the other hand, since we know now how we'd like to proceed in these areas, we find ourselves well-positioned to comment on both proposed regulations and the proposed (but too slow!) schedule of awards.

States have an incentive to move very quickly once ARRA money has been granted. If the money is not spent quickly, it will be reclaimed by the feds and redistributed to speedier states. Our ambition is to have Vermont benefit from these reallocations. Our small size and the important fact that we already have projects in broadband, smart grid, and health information systems underway will help; some of our permitting and review processes could be a problem. Stay tuned.