Illinois’ outdated electrical grid needs extensive work as power demands grow. The state needs all the bells and whistles of new technologies that could make power more reliable and help to cut down on energy usage. And above all, it needs to move forward with the upgrades quickly to avoid eating the dust of other states making such improvements.

So say those backing legislation recently approved by the General Assembly that would allow the state’s two biggest utility companies to raise customers’ rates so they can invest billions in the grid. 

“Relying on an electrical grid that was created over 100 years ago doesn’t make a lot of sense in today’s technological world. People are demanding more and more use of energy, and also, people on the green side are demanding smart energy,” says East Moline Democratic Sen. Mike Jacobs, who sponsored the measure. “If we don’t take care of what we need to take care of, what we’re going to find is that Illinois will no longer be a leader.” 

Whether the needs are as urgent as those pushing the plan claim depends on whom you talk to. However, there is one thing those supporting and opposing that specific proposal to improve the grid do agree upon: Illinois’ grid needs to be “smarter.” 

But what does that mean? “Smart grid” has become a buzzword of sorts in recent years. How does an electrical system become smarter, and what is the impact for consumers? “Smart grid has become this catchall term for anything and everything, and lots of people use it to mean many different things,” says Jonathan Feipel, deputy director of the bureau of energy and recycling at the Illinois Department of Commerce and Economic Opportunity. 

Feipel says the definition of such terms has become slippery in recent years, since conservation has become more in vogue. He compared it to a marketing practice known as “green washing” that gives consumers the impression that a product is eco-friendly when it is really not. But when it comes to terms such as “green jobs” and smart grid, government officials have to find ways to define them to determine if they are reaching their objectives. “When you say green, what does that even mean?” Feipel asks. 

A 2009 report titled Empowering Consumers Through a Modern Electric Grid from the Illinois Smart Grid Initiative says, “The smart grid concept, as defined by Congress and the many others who have worked to develop it, combines new information technologies with the traditional electric power infrastructure to improve utility operations and to extend greater control to customers.”

Feipel says the simplest way to define smart grid is the incorporation of computer technology into the grid system. “The key is, what does that computer do?”

Smart grid is essentially about communication, both allowing the grid to “tell” the utility more about the transmission of electricity and when there may be a problem with the system, as well as bringing consumers more information about their power consumption. 

For example, at present, when a storm knocks over a tree that pulls some power lines down with it, utilities have no idea that it has happened until customers call. “Really, they’re at the mercy of people telling them what the issue is,” Feipel says. 

Anyone who has called a utility company after a particularly heavy storm knows it can mean a long wait on hold to report an outage. New smart technologies could change all that. Sensors in the system would be able to alert the utility via a broadband network when lines are down or power is out in a certain area. Such information, Feipel says, “allows the utility to very quickly and — here’s where the term smart comes in — intelligently respond.” 

There is even the potential for the grid to preempt a problem such as a blackout by alerting utility employees when the potential for one is high and giving them the chance to intervene. “It doesn’t mean a tree won’t fall on a line. We’re still going to have outages,” Feipel says. But with new technologies, “in all cases, they should be minimized and identified and restored quicker.”

One of the key components to such an upgrade is smart meters. Those devices would allow customers to track their power usage. If customers chose to buy their power at real-time market rates — hourly rates that are determined by average usage — they could incur savings by opting to use less juice at peak demand times, when electricity costs much more. “As we speak today, and it’s 95 degrees out, the price of electricity is about 10 times higher today than it was two weeks ago … in off-peak hours,” Martin Cohen, an energy policy consultant with Martin Roth Cohen and Associates, told Illinois Issues on a hot June afternoon. 

Commonwealth Edison is administering a smart meter pilot project in the Chicago area, and Rep. Dave Winters, a Republican from Shirland, is one of the participants. “My own household is paying by the hour whatever Commonwealth Edison is paying for the power. So if I chose to use my power at nighttime or a time when power is cheap, we’re saving over, I think, 15 percent on an average monthly bill.”

Being aware of consumption may also change behavior. Much like counting calories can sometimes cause people to make healthier food choices, seeing in black-and-white terms how much power you are using may inspire you to use a little less and maybe turn off some lights. If a smart meter continues to show that a household’s old fridge is sucking a lot of power, the family may eventually decide to buy a more efficient appliance. 

Other potential savings through efficiency may not be as obvious to customers. Smart meters can be read remotely, so they have the potential to all but eliminate estimated bills that utilities send out when bad weather or other obstacles prevent utility workers from getting to a meter to read it. Anne Pramaggiore, president of Commonwealth Edison, says that her company sends out millions of estimated bills at times when it is most difficult for meter readers, such as during winter storms. 

“As we install automated devices on the grid, that will help control voltage. Customers will be paying less for electricity because there will be less electricity flowing through the grid, and it will still meet their energy needs,” says Craig Nelson, senior vice president of regulatory affairs and financial services for Ameren, which powers much of downstate Illinois. 

Cohen, a former director of the Citizens Utility Board, a consumer advocacy group, explains that to keep power levels at an optimum voltage, utilities usually set the voltage a little high. But with more accurate information, they could save voltage — and money. 

“When the system is more efficient, customers save money. The question, of course, is compared to what?” Cohen says. “One crucial policy objective should be to make sure that the benefits for the consumers who are paying for it exceed the costs.”

John Rowe, chairman and chief operating officer of Exelon, ComEd’s parent company, voiced skepticism about the cost benefits of smart grid for customers when he spoke at the American Enterprise Institute for Public Policy Research earlier this year. He said utilities are hesitant to make large investments in smart grid technologies without government subsidies. “Smart grid, we’re reluctant to embrace because it costs too much, and we’re not sure what good it will do,” Rowe said. “We have looked at most of the elements of smart grid for 20 years. And we have never been able to come up with estimates that make it pay.”

Rowe said upgrades would help with storm recovery and keeping customers informed. “We don’t know how much effect it will have on demand and energy use, which is the prime driver behind it.” He said pilot programs such as ComEd’s in Illinois are the best way to test whether the technologies will truly produce savings and reduce energy demands. ComEd expects final reports from its program in the fall. 

Both Cohen and Feipel envision a future where customers could easily control their power consumption remotely with a smart phone application, kicking off their air-conditioning or shutting off lights, or even presetting such things to happen during peak consumption. “All of this movement toward energy management by consumers, and all the benefits that may have in the long run, will not happen unless it can be done very easily. Nobody is going to spend their time worrying about all the details of when to do their laundry or what lights should be on when or whether the water heater should be up full or only on warm. … It’s got to be painless and easy and set it and forget it. And the technologies, I think, will be there to make it that eventually, although it isn’t right now,” Cohen says.

According to Rowe: “The real issue is, are we doing the customers more good by putting money into more advanced electronics? Or would we do them more good by putting the same money into replacing more old cable? To me that’s an unknown answer. If I had to choose, I’d bet on the cable.” 

Some experts say smart grid technologies could help slow the need to expand the grid and could direct future expansion in more efficient ways to areas that need it most. Feipel says a potential reduction in demand that could come with smart meters, coupled with much more efficient and targeted transmission of power, including lower voltage levels, would let utilities meet the same needs with less power and “help us stave off the need for enormous transmission grid upgrades.”

Mike Abba, project manager for Ameren Illinois’ smart grid technologies, says the increased information that a smart grid would bring would allow utilities to have a more detailed picture of where demand is highest or where it is growing rapidly, so they could better target what parts of the grid might need work or expansion. “Putting in more sensors and getting better data, we can more efficiently plan the system — where it needs to grow and where we need to build out.”

The decisions being made about the grid now could have a large impact on where the state gets its power in the future. “The grid we have is old [and] needs vast improvements in the tens of billions of dollars. We’re talking lots of money,” says David Kraft, director of the Chicago-based Nuclear Energy Information Service, an organization that advocates for an end to nuclear power. “The type of grid we choose now is going to set the playing field for energy choices for generations.”

Kraft says the state should ramp up the amount of renewable energy that utilities must purchase under the Illinois Renewable Electricity Standard, which currently requires that by 2025, renewables must represent 25 percent of purchased power. He says such a move “would push the infrastructure to match the power source.” 

New technology opens up the possibility for more homeowners and businesses to generate power through renewable means, such as solar, wind and geothermal, and sell what they don’t use back into the grid for use by other consumers in their area. That happens in a rudimentary way now, through a process known as net metering — basically, a two-way meter that allows unused power to flow back into the grid. 

There is potential for such pockets of consumer-generated energy to become a default system that would step in when utilities experience blackouts. Customers who lost power would automatically be rerouted to those sources. Abba says the only way to do that would be for utilities to know precisely how much demand there was and exactly what these secondary sources could provide, information that could be gathered by smart grid sensors. Other separate issues, such as storage of such energy, would also need to be addressed. 

Cohen says there is a possible upside to Illinois taking a measured approach to unrolling smart grid technology. “This is not a footrace between states to see who can get there first. In fact, there’s some advantage to not going first. … Some of the early installations are already showing themselves to be obsolete.”

Cohen, who was the facilitator of Illinois Statewide Smart Grid Collaborative, a stakeholder group established by the Illinois Commerce Commission in 2008 to probe the potential for smart grid in the state, says a smart grid plan should be handled in a collaborative way that recognizes the interests of utilities, consumers and environmental groups. “The winners and losers are hard to predict; I think, overall, there’s a lot to be won. There’s a lot of benefit. … But there are also people who stand to be hurt, depending on what policies are put in place.” He says regulators and policymakers should be conscious of the potential social implications of the technologies. “The policy questions are more important in the long run than the technology questions.”

Some consumers need power during peak hours and cannot do much to adjust their usage for savings. If they pay the market rate during those hours, they could end up paying higher prices. “My 87-year-old mom at home today needs to have her air conditioner on,” Cohen says. That issue could be addressed by offering customers a variety of rate options. 

Smart meters would allow utilities to remotely turn power on and off. That would be useful for new tenants who want their power turned on quickly or people moving who want to ensure they will not pay for power once they have vacated a residence. However, Cohen says, “if you’re going to be disconnected for nonpayment … you probably wouldn’t consider that a benefit. … Right now, there are a lot of people who are not disconnected because ComEd and Ameren do not have the personnel to do so.”

Another potential scenario Cohen paints involves customers with low credit ratings using different payment methods. “You get credit automatically. Everybody gets credit from the utility companies.” But smart grid could enable pay-as-you go electricity that those with bad credit might buy to avoid paying large deposits to have their power turned on. In that case, once the money ran out, the juice would be likely cut off. “It raises core public policy issues about equal access to a core service to all customers.”

Cohen says smart grid has the potential to provide volumes of accurate information about the transmission and consumption of power in the state. He says the questions that consumers and policymakers should be asking are: “What do we want to do with all that information? How are we going to use it? And who is going to use it and for what purpose?” 

Illinois Issues, July/August 2011