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Money to Burn

Smart-grid stimulus targets the wrong problem.

Fortnightly Magazine - March 2009

the smart-grid stimulus leads to such investments, it will yield tangible dividends for U.S. electricity users. But to the degree it presents utilities with a use-it-or-lose-it choice, and tempts them to spend money in ways that don’t necessarily serve long-term policy goals, taxpayer money might be wasted—or even spent in counterproductive ways.

For example, some companies might launch pilot projects that delay rather than accelerate the transition to a smart grid. Or they’ll de-prioritize progress toward AMI and smart rates, and focus all their stimulus spending on investments in reliability and outage management—which are worthy and necessary investments, but they don’t change the utility game.

If they’re being alert, regulators who review utilities’ smart-grid projects will guard against tactics that serve to perpetuate the old Thomas Edison-era business model. The smart-grid stimulus will accomplish the most good if it accelerates the transition to a 21st century utility system—in which the grid encourages rather than obstructs growth in alternative resources, and in which customers have more options and greater control over their energy consumption.