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The Smart-Enough Grid

How much efficiency do ratepayers need—and utilities want?

Fortnightly Magazine - August 2009

customer meter “would have to be housed and locked up with access only by approved personnel.

“In most cases,” adds Allegheny in its comments, “this would require moving meters from their current location and building some type of structure.”

Some voices in the utility industry now ask why they must endure such pain to empower what is today no more than a vision, whose cost-benefit credentials have yet to be confirmed. They suggest that the grid already may be smart enough or, if not, that it will reach that point very soon, given the current rate of investment in grid infrastructure, from smart meters to thousand-mile transmission lines.

All of this leaves FERC with two basic outs for getting the smart grid up and running. One option would have the commission mandate the mother of all cyber security rules. The other option would entail holding its nose, looking the other way, and passing the hot potato along to the state PUCs, on the theory that any smart-grid device, protocol or communications channel not connected directly to the interstate bulk power system or its control centers will be deemed to be part of the retail distribution network, lying beyond the reach of FERC.

The California Public Utilities Commission, which already has opened its own rulemaking case on smart-grid policy (R. 08-12-009, issued Dec. 22, 2008) argues that FERC should make the NIST interoperability standards voluntary, not mandatory, so that state PUCs have “leeway,” depending upon how far they have progressed in smart-grid deployments.

While it concedes that a “patchwork” of standards could be harmful, the CPUC nevertheless insists that the states—not FERC—“should have the authority to direct their electric companies to institute certain NIST-adopted standards to the state-jurisdictional distribution network” (see Comments of Cal. PUC, pp.5-6, filed May 11, 2009).

Southern Company Services notes that FERC’s December 2008 Staff Report on Demand Response and Advanced Metering had concluded (p. 18) that uncertainty over standards had made some state regulators reluctant to move ahead on AMI specifications out of fear that they might choose an unsupported technology.

Duke Energy advises FERC point blank that “an interoperability framework may not be economically viable if all smart grid assets are categorically subjected to all of the requirements of the CIP Reliability Standards.”

Duke reports that its pilot program in North Carolina soon will allow participating residential customers to install digital communications technology on home air conditioners and water heaters, with access to a Web site to monitor and control energy use by individual appliances. Yet, it still can imagine such devices operating without specific CIP coverage. Duke’s comments urge FERC to achieve interoperability in a way that would allow the utility industry to minimize the types of smart-grid assets deemed to be critical cyber assets. According to Duke, much of the distribution-level smart-grid equipment will impact “only localized areas” of utility systems. “Any potential infiltration of these devices,” writes Duke, “would be isolated and locally contained.”

Otherwise, notes Duke, the cost “could become prohibitive” and impede smart-grid development (see Comments of Duke Energy, pp. 2, 7-8,