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The Smart-Enough Grid

How much efficiency do ratepayers need—and utilities want?

Fortnightly Magazine - August 2009

FERC Dkt. PL09-4, filed May 8, 2009).

Ohio Consumer Counsel Janine Migden-Ostrander joins the chorus of utilities and advocates who warn that the smart-grid initiative, when coupled with climate-change legislation, plus expensive new transmission lines to wheel renewable energy from West to East, will leave ratepayers in the lurch: “Consumers,” she writes, “are staring down the barrel of a host of extraordinary costs.”


Beyond the fact that the Feds could leverage the smart grid to gain a foothold inside state-supervised distribution networks, many in the power industry have serious questions:

• First, whether FERC has a realistic view of much time it will take to set standards;
• Second, whether FERC fully understands the quantum leap in complexity and risk posed by smart-grid integration; and
• Third, whether there is any real certainty of reaping benefits from smart-grid deployment.

Congress has set no specific deadline for finalizing the smart-grid interoperability standards. Yet, FERC in its policy proposal cites a certain “sense of urgency within industry and government” for the development of standards and ultimate deployment of smart-grid technologies.

Many in the industry envision standard-setting as a forever-evolving iterative process. FERC itself has directed the North American Electric Reliability Corporation (NERC) to continue to improve and refine its CIP standards. On May 9, NERC’s Board of Trustees voted on a new Version 2 for CIP standards 002 through 009.

San Diego Gas & Electric says it expects it will take between three to five months “of focused efforts” for NIST and its stakeholders to map out each point of interoperability among various smart-grid systems, but that the actual approval and development of consensus-based standards “could take as little as one year but possibly as long as 10 years, depending on the technical complexity and nature of the issues involved at each point of interoperability.”

Such pessimism is notable, given the fact that smart-grid standards already exist for a smattering of technologies and protocols. One example is the so-called “GWAC Interoperability Stack,” developed by the DOE’s GridWise Architecture Council — a fact well noted by Sempra senior regulatory counsel Alvin Pak, who filed the SDG&E comments.

As Pak explains, the GWAC framework “was developed in collaboration with the electric industry and other key stakeholders through a process involving extensive expert interviews, workshops and iterative drafts.

“This framework,” Pak writes, “enjoys a reasonably strong consensus of opinion and is quite familiar to the Institute [NIST], which had a considerable hand in its drafting” (see SDG&E comments, at p. 13).

For other examples of smart-grid standards already in use, refer to the copyrighted white paper: Overview of the Smart Grid–Policies, Initiatives, and Needs , ISO New England, Feb. 17, 2009. Table 2, page 15, lists “Existing Technical Standards for Smart Grid Applications.”

NRG, meanwhile, suggests that the existence of prior, state-approved smart-grid deployments should carry weight when FERC sits down to decide whether a consensus has been reached on standards.

Unprecedented Risk

The smart grid takes cyber risk to a whole different level. One reason: The simple step of requiring a smart-grid deployment to demonstrate