States the Key to Progress, Says Grid-Savvy Governor

By West Virginia Gov. Joe Manchin

Editor’s Note: An obvious gap exists between the rhetoric surrounding the Smart Grid panacea and the long, hard work involved in making the grid smarter. In this special guest commentary, West Virginia Governor Joe Manchin explains why upgrading the nation’s electricity grid is a national problem that will be solved on a state-by-state basis

Federal stimulus funding has made Smart Grid a hot topic lately. That’s good, because we need the public and policymakers to understand the limitations of today’s electricity delivery systems and the need for wholesale changes. However, there is a gap between the rhetoric surrounding the Smart Grid panacea and the long, hard work involved in making the grid smarter.

A great deal of effort has been made by vendors in the research and development of technology that can assist with system efficiency, reliability, demand management and the like. Electricity providers have spent years planning Smart Grid deployments. The federal government has stepped in with a massive funding infusion. Now comes the hard part.

Despite the calls for a national Smart Grid, the reality of Smart Grid deployments is that they will be made on a state-by-state, project-by-project basis. The deployments will be dictated by state laws involving energy efficiency, conservation, demand management, metering, and other issues. They will require regulatory approval for new rate structures and cost recovery. They will feature public education and open dialogue to ensure that project goals meet customer demands. In short, for deployments to succeed, a healthy dose of collaboration and compromise will be required.

The journey of the Smart Grid from concept to reality will end in the state capitals. If the right choices are made by policymakers, regulators, customers and electricity providers, this end will bring about the beginning of a modern, smarter grid, better suited to the challenges of today’s economy. 

With that in mind, what should we expect and require from the states? I offer the following:

Planning, Guidance, and Coordination

As the saying goes, we all need to sing from the same songbook. In Smart Grid terms, that means that stakeholders within states must understand the current status of their grids, the specific Smart Grid opportunities from which the state can benefit and the exact benefits that state residents should expect.

This is why, in West Virginia, we developed a West Virginia Smart Grid Implementation Plan, the first statewide Smart Grid plan in the nation. Working with the state’s two public utilities (Allegheny Energy’s Allegheny Power subsidiary and American Electric Power’s Appalachian Power subsidiary) and directed by the U.S. Department of Energy and the West Virginia Division of Energy, a consulting team led by Horizon Energy Group performed a thorough review of the state of electricity in West Virginia. Importantly, the study also documented customer perspectives and an analysis of regulatory barriers.

Essentially, the study reviewed where West Virginia is today, where we may be going in coming years and the gap between the two that must be bridged, including costs and benefits. Such a document can assist utilities, policymakers, regulators, and the public in establishing realistic goals and expectations for grid modernization efforts in West Virginia.

Comprehensive Policymaking and Regulatory Activities

From a policymaking perspective, Smart Grid can mean many different things depending on the area of emphasis. Which is why state officials should ensure that no one issue comes to dominate the agenda and that a comprehensive approach is considered. Smart grid, as a public policy concern, does not exist in a vacuum. So, we must, collectively, move toward those goals that can create the greatest benefit for the greatest number. This may involve moving forward on those policies where a state has lagged or leapfrogging ahead in some areas that remain murky in other states.

In West Virginia, we are moving forward simultaneously on a few issues. For example, recently passed alternative and renewable portfolio standards require 25 percent of the electricity sold to retail customers to be generated from alternative and renewable energy sources by 2025. Importantly, this includes provisions for Smart Grid technology deployments. Linked to the portfolio standards, the bill creates a trading system for alternative and renewable resource credits, energy efficiency and demand management credits, and greenhouse gas emission reduction or offset credits, which will promote green energy and Smart Grid projects. Addressing energy, environmental and economic issues in an integrated fashion like this is crucial to ensuring successful Smart Grid deployments.

Support for Innovation

Another crucial activity is support for both existing and future deployments. Right now, West Virginia is home to a few innovative technology projects that have been well received by state and federal officials. In the northern part of the state, Allegheny Power has been working with technology provider Augusta Systems on a number of Smart Grid projects that involve the use of an integrated, intelligent communications and control network, featuring smart meters, line and substation monitors, automation equipment, distributed resources, customer appliances, and more. In the southern part of the state, Appalachian Power has been exploring the use of advanced storage devices to assist during peak demand periods.

Providing incentives for new deployments at the state level can ensure that the best technologies move from the lab to the grid. For example, our new legislation also establishes a matching grants fund for the research, development, demonstration and commercialization of alternative, renewable, and energy efficiency projects. From an employment perspective, these current and emerging projects create opportunities for green collar jobs for engineers, technicians, installers, and other personnel.

There isn’t a one-size-fits-all approach to Smart Grid policymaking at the state level, just as there isn’t a one-size-fits-all approach to the Smart Grid. However, there are key issues and approaches that states should consider as the debate moves from Capitol Hill to the state capitals. Neither the federal government nor electricity providers can make electricity grids smarter overnight. It is up to the states to ensure that the transition to a smarter grid is as efficient and effective as possible. The charge is now ours, and I welcome the opportunity.

   West Virginia state toolkit and links