In government, and in business, often times the decision to move forward with spending and investing large sums of money is based on a cost effectiveness or return on investment analysis. If the analysis shows that an investment of $1.00 will yield $1.5 in return, the policy or action is deemed to be cost effective and therefore, a good investment.
As we now know, the City of Tallahassee relied on a cost effective analysis provided by Honeywell Inc., – the vendor for the smart meters. The analysis indicated that over a 15 year period the smart meter program would be cost beneficial for residents of Tallahassee. This analysis was used as support for moving forward with the program.
Beyond the potential conflict of interest with a vendor providing a cost effective analysis for a program they are selling, there remains serious questions about the analysis.
The Honeywell analysis indicates that if 25,000 customers sign up for load control programs, the City of Tallahassee will spend $39.2 million over 15 years and save $40.6 million for a net savings over 15 years of $1.4 million.
Is this a good deal? Consider this… if you assume an average of 100,000 utility customers per year over the next 15 years, the net benefit per customer per month would be $.77.