In an effort to modernize the Illinois electric grid, state legislators approved a controversial bill last month to jump-start more than $3 billion of investment by the two largest utilities.
Led by Chicago-based ComEd, the utilities lobbied hard for the ’smart grid” measure, which would jolt the state’s electric distribution network into the 21st century and impose sweeping regulatory changes. Environmental groups have embraced the measure. Consumer advocates have condemned parts of it as a ploy to boost profit. Gov. Pat Quinn has vowed to veto it.
Regardless of how the drama plays out in Illinois, there’s no rush to follow suit on the other side of the Mississippi River. As with electric deregulation a decade ago, the Missouri utility industry would rather watch and wait. Regulators, utility executives and consumer advocates in Missouri see peril in rushing to spend billions of dollars on new technology that may not pay immediate dividends.
“Everybody agrees we’re using way-old technology and older infrastructure, and we have to move toward upgrading and updating our electrical grid,” said Missouri Public Service Commission Chairman Kevin Gunn. But “this is the perfect example where the Show-Me state motto is the right way to go.”
The term smart grid generally refers to technological upgrades designed to improve reliability and efficiency of the nation’s power grid. Most attention has focused on new digital meters, but other infrastructure aims to minimize outages, allow for increased use of renewable energy and allow consumers to buy cheaper power during off-peak hours.
“This is a major transformation of the power grid that’s going to take a numbers of years, it’s going to occur in stages, piece by piece,” said Peter Fox-Penner, a principal at the consulting firm Brattle Group.
national backlash
Across the country, smart grid projects, especially those involving new digital smart meters, have sparked a backlash. In Texas, regulators were asked to investigate the accuracy of the new meters. In San Francisco, customers are worried about electromagnetic radiation. A few California cities have declared moratoriums on the new meters. Privacy advocates worry about what utilities will do with the data they collect on consumer energy use.
All of this provided fodder for discussion last summer as the Missouri PSC held a smart grid workshop with representatives from utilities, the Energy Department and smart grid vendors. Regulators and utilities continue to closely watch demonstration projects in Fulton and Kansas City that are paid for partly with stimulus grants.
In Illinois, it’s the debate over the regulatory framework being proposed by utilities that’s raising second thoughts payday loans in one hour. David Kolata, executive director at Citizens Utility Board, a Chicago-based utility watchdog, said the group backs the bill’s smart grid provisions. What it objects to are more sweeping changes in the legislation that could expose consumers to higher rates.
“It’s increasingly clear that we’re not going to build our way out of future energy issues” by adding new power plants, he said. “But there cannot be a blank check” for utilities.
Whatever the cost, the benefits of a smart grid could be enormous. Some say it could do for the nation’s patchwork electric grid what the Interstate highway system did for car travel, and revolutionize energy use the way the Internet changed the flow of information.
Today’s grid is a giant one-way road where electricity is pushed from a few large generating plants to millions of customers. Utilities charge the same rate for every kilowatt-hour, even though electricity costs vary widely throughout the day. And consumers have little idea how much power they’re using, and so they have little incentive to use less at peak times when electricity prices are high.
The smart grid would make better use of intermittent power sources such as windmills and solar arrays. New meters could make it possible for utilities to charge different rates for electricity at different times of the day, so consumers can run the dishwasher or clothes drier at night to save money. And new smart thermostats and appliances would be able to automatically adjust power use in response to changing prices.
Such improvements would help utilities avoid building expensive new power plants that run only a few hours on hot summer afternoons to help meet peak demand. They would improve air quality and cut down greenhouse gas emissions.
barriers to entry
But getting from here to there won’t be easy or cheap. The Electric Power Research Institute estimates implementation of a nationwide smart grid will require investment of as much as $476 billion.
Advancing the smart grid also requires consumers to buy in. And it has been a tough sell so far. Earlier this month, Kansas City-based Black & Veatch released results of an industry survey showing the main impediment to smart grid implementation is a lack of customer interest and knowledge.
Much of the controversy has focused on the new digital meters. Some consumer advocates, like John Coffman, an attorney for the Consumers Council of Missouri and AARP, worry the devices will prove too expensive and need replacement too quickly. Coffman also worries it could make it too easy for utilities to disconnect customers who fall behind on bills.
For now, the new meters aren’t in Ameren Missouri’s plans. The cost of smart meters