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Technology for the Masses

The consumer-centric smart grid and its challenge for regulators.

Fortnightly Magazine - October 2011

companies and regulators would need to fix. Most likely no one would be completely happy.

Wise regulators will take a long view when considering the extent to which they will encourage or accommodate these technological changes. Technology is always difficult to control and regulate. Innovation is likely to be swift and somewhat difficult to predict. The possibility of technology overtaking regulation is real. Nevertheless, there are overwhelmingly valuable potential benefits to realize for the nation with the emergence and use of these new technologies and concomitant energy- and money-saving services.



1. Energy Independence and Security Act of 2007, Title XIII-Smart Grid, Section 1301 Statement of Policy on Modernization of Electricity Grid. (Pub.L. 110-140).

2. American Recovery and Reinvestment Act of 2009 (Pub.L. 111-5).

3. Staff Report, Federal Energy Regulatory Commission, June 2009, prepared by The Brattle Group, Freeman, Sullivan & CO., and Global Energy Partners, LLC, Assessment of Demand Response & Advanced Metering, 2009 .

4. Ibid. page 29.

5. Federal Energy Regulatory Commission, Smart Grid Policy, Proposed Policy Statement and Action Plan (March 19, 2009), PL09-4-000.

6. FERC website at smart-grid.asp

7. Federal Energy Regulatory Commission, “Possible Elements of a National Action Plan on Demand Response” Docket No. AD09-10, Oct. 28, 2009. See FERC website .


9. See “ A Policy Framework For the 21st Century: Enabling Our Secure Energy Future .”

10. The ARRA funding has helped several states begin deploying smart grid improvements. The debates over the details of what, how, and why have been restricted to a smaller number of states. Four seem particularly noteworthy: California, Texas, Pennsylvania, and Colorado.

11. Section 1305 of the Energy Independence and Security Act of 2007 requires FERC to review and adopt, to the extent needed for the smart grid to operate, the protocols and standards the National Institute of Standards and Technology establishes for smart grid systems and devices. But finding consensus on smart grid operability standards has proven difficult. See, e.g. FERC Docket RM11-2, Order of July 19, 2011, 136 FERC ¶61,039. See also, Techno-Regulation, Public Utilities  Fortnightly, June 2011, p. 26.

12. Decision Adopting Rules to Protect the Privacy and Security of the Electricity Usage Data of Customers of Pacific Gas and Electric Company, Southern California Edison, and San Diego Gas & Electric Company, Decision 140188, Docket R 08-12-009, Agenda Item #10387, July 27, 2011.

13. For example, the Brattle Group has explained to the Colorado Public Utility Commission that in-home energy use display alone would save about 7 percent of current electricity consumption. Faruqui, Ahmad and Sanem Sergici, “The Impact of In-Home Displays on Energy Consumption,” July 6, 2010, Colorado PUC Docket 1OI-099EG.

14. See FERC Order 745, Demand Response Compensation in Organized Wholesale Energy Markets, March 15, 2011, Docket No. RM10-17-000, 134 FERC ¶61,186.