SMART GRIDS: the U.

S
Regulatory Environment

Jill Lyon
May 5, 2009
 Status of Smart Grid

• It’s technological: systems, interfaces,

standards
• It’s business: rate recovery, capital outlay,
economic justification for investment
• It’s political: Federal vs. State – who
controls and drives?
• In the U.S., it’s confusing, but everyone
wants a piece of it . . .
 Background: legislation

• Energy Policy Act of 2005 – includes

language requiring States to consider
requiring time-based metering
– Has led to growth of Advanced Metering
Infrastructure (AMI) projects first
– Common misconception of smart grid as
“smart metering,” without recognition of other
internal applications for utilities
Smart Metering Projects
 New Energy Legislation
– New Understanding
• Energy Independence and Security Act of
2007 (EISA)
– Title XIII – “Smart Grids” recognized link
between electric utilities and “digital
information technologies”
– Attempt by Congress to define smart grid,
encourage projects and standards
– Authority given to Department of Energy
(DOE) to oversee progress, issue reports
– Nat’l Institute of Standards and Technology
(NIST) charged with interoperability stds
 EISA and UTC

• UTC able to add language to bill

concerning need for “communications
network capacity” to support IT
• UTC extremely concerned about lack of
dedicated spectrum for utilities, is seeking
30 MHz to make Smart Grid deployment
possible
– Reflects need for reliability not found in
commercial networks
– Similar efforts in Canada, Europe also
 EISA Progress
• DOE establishes Smart Grid Advisory Committee
and Smart Grid Task Force
• DOE releases 1st Smart Grid report (12/08)
– NO mention of communications networks
• NIST working on interoperability roadmap
– Provides framework, identifies six domain expert working
groups (DEWGs) for aspects of interoperability.
• State regulators initiating SG proceedings, as
required by EISA; some States pass SG bills.
• Separately, Congress accelerates depreciation
cycle for SG and smart meters to 10 yrs.
 EISA Funding

 Regional demonstration initiative

 Projects to leverage existing smart grid
deployments to show benefits, demonstrate
standards, facilitate use of technology
 Up to 50% investment cost reimbursement
 Matching grant fund
 Up to 20% matching $$ for “qualifying
investments,” including control networks,
communications systems
 Neither program actually funded before
‘09
 New Administration
Seeks Stimulus
• American Reinvestment and Recovery Act
(“ARRA,” or “the Stimulus Package”)
– $787 billion for economy, jobs creation
– $4.5 billion for smart grids!
• ARRA finally provides $$ for EISA programs
through DOE
– Will fund 50% of demonstration projects
– Will match 50% investment in smart grid
– $10 million for NIST interop. work
– Open/IP stds to be used “where appropriate &
available”
ARRA $$ = Frenzy!
 Program Moving Fast

• April 16, DOE releases Funding

Opportunity Announcement for
demonstration initiative, Notice of Intent
on matching grant fund
– Comments on both due May 6
– Application process finalization expected in
summer 2009
• Generally, smart grid projects already
approved/underway expected to have
best chance for $$.
 State Action

• Utilities need regulatory certainty, or they

cannot justify Smart Grid investment
• State legislation/regulation promising rate
recovery is fastest way to deployment, BUT –
many States waiting for Federal guidance
• Separately, >30 States have renewable
generation goals
– California: 20% by 2010 (?)
– Illinois, Arizona 25% by 2025
– BUT, lack of consensus on what is renewable: wind,
solar, biomass. Nuclear? Hydro?
 Now, Cybersecurity

• HUGE concern over cybersecurity is latest

wrinkle in Smart Grid deployment
• Existing standards deemed inadequate
– No. American Electric Reliability Corp (NERC)
suite dismissed because utility-developed
– News stories about meter vulnerabilities, foreign
hackers into electric grid
• Congress, White House, Federal agencies
vying for control of issue, multiple bills
pending – highly political!
 CyberSecurity Policy Arena

ENERGY Sector

DEWGs
SMART
GRID

Proposed White
National
House Office of
Cyber Security Labs
Advisor GWAC
NIPP – ICSJWG
US CERT – ICS
CERT
 Conclusions

• U.S. utilities over the threshold of smart

grid deployment, but no universal action
• ARRA money is jumpstart, but scattered
projects only
• Issue is so political that a thoughtful,
consistent policy is unlikely
• Democrat administration leans toward
Federal control; additional legislation on
energy, cybersecurity guaranteed while
States fight for authority
QUESTIONS?
THANK YOU!