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Aug. 4, 2009: FERC Adopts Policy to Accelerate Development of Smart Grid

August 4, 2009

WASHINGTON - The Federal Energy Regulatory Commission (FERC) has issued a Smart Grid Policy Statement that sets priorities for work on development of standards for a smart grid. FERC said this policy will help accelerate the development of a smart electric transmission system that could provide long-term savings for consumers by improving the efficiency and operation of the grid.

According to FERC, smart grid advancements will apply digital technologies to the grid, enabling two-way communications and real-time coordination of information from both generating plants and demand-side resources. This will improve the efficiency of the bulk-power system with the goal of achieving long-term savings for consumers. And it will help promote wider use of demand response and other activities that give consumers the tools they need to control electricity costs.

The final policy issued closely tracks the proposed policy issued March 19. It sets priorities to guide industry in development of smart grid standards for achieving interoperability and functionality of smart grid systems and devices. It also sets out FERC policy for recovery of costs by utilities that act early to adopt smart grid technologies. More than 70 sets of comments from interested groups indicated broad support for the proposed policy.

“Changes in how we produce, deliver, and consume electricity will require ‘smarter’ bulk power systems with secure, reliable communications capabilities to deliver long-term savings for consumers,” FERC Chairman Jon Wellinghoff said. “Our new smart grid policy looks at the big picture by establishing priorities for development of smart grid standards, while giving utilities that take the crucial early steps to invest in smart grid technologies needed assurance about cost recovery.”

“The smart grid policy provides a roadmap that will guide the transformation of the old grid into the grid of the future, while providing for fair regulatory treatment to consumers and utilities,” Commissioner Suedeen G. Kelly said.

“It’s our responsibility to help protect the security and reliability of the nation's electric grid by adopting effective cyber-security standards for the smart grid,” Commissioner Philip D. Moeller said. “If we do that right, consumers can look forward to exciting new products and services from a smarter, safer, and more efficient grid.”

“The policy statement provides important guidance to focus and expedite ongoing industry efforts to develop interoperability standards - this will enable entrepreneurs to deploy new market based technologies to improve efficiency and reliability,” Commissioner Marc Spitzer said. “Equally important, this policy statement is a step toward smarter rates that will enable customers to control their personal use of electricity.”

The new policy adopts as a priority the early development by industry of smart grid standards to:

• Ensure the cyber-security of the grid;

• Provide two-way communications among regional market operators, utilities, service providers, and consumers;

• Ensure that power system operators have equipment that allows them to operate reliably by monitoring their own systems as well as neighboring systems that affect them; and

• Coordinate the integration into the power system of emerging technologies such as renewable resources, demand response resources, electricity storage facilities, and electric transportation systems.

For more information, visit www.ferc.gov.

Publication date: 08/03/2009