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July 2013 Policy Study, Number 13-5


Electricity – Make It, Use It – 24/7/365

Review of Electrical Grid Issues


Smart Grid Technologies



The Electric Power Research Institute estimates that upgrading the system to “smart grids” would cost almost $500 billion over 20 years.[39]


Smart grids are “computer-based, automated systems” which will improve overall system management – yet must be protected against cyber security attacks. Automated electronic sensors which gather data and communicate between the end user and the central operations are important components of the smart-grid system. These sensors allow the control of “millions” of devices, and are able to optimize both supply and demand to increase reliability and respond to spikes in demand or damage to the overall system.[40]


For most consumers, the smart-grid technology is unnoticeable at the point of delivery. It may consist of computerized metering systems which control air conditioning on the hottest days or automated bill reading. Currently over 116 million households have smart-meter units.


Groups such as MISO are critical parts of this smart-grid system. As of June 2013 the system they manage has over 282,000 data collection points, taking 249,000 different real-time measurements used to balance the grid every 60 seconds. In anticipating grid flows there are 11,500 “what if” contingency scenarios solved every four minutes.[41] Based in Carmel, Indiana, MISO has 857 full-time employees and became the first regional transmission organizer in 2001.


In managing the prices paid for electricity by MISO corporate members, and eventually the end-use customer, there are almost 2,000 pricing nodes, with a 30-minute pre-use pricing lock-in. Spot market prices are “calculated every five minutes.”


This incredibly complex system serves over 42 million end-use customers throughout the central United States. Amazingly enough, unless there is an outage, the end customer never sees this or thinks much about the system. Many customers set “budget billing” up with MidAmerican Energy and lock in monthly automatic payments at the beginning of a year, then rarely think about how it actually works.


The American Recovery and Reinvestment Act of 2009 (ARRA) directed about $4.5 billion to modernization of the power grid, including a strong focus on the smart grid technologies. As part of this effort the Iowa Association of Municipal Utilities (IAMU) won a $5 million grant to install 32,000 advanced thermostats in homes and businesses in 2010. These thermostats included “smart meters,” programmable communicating thermostats, and “direct load” control devices.


Using these technologies, end-use customers can control their own electricity use via the web, while the utilities can control demand reductions during peak periods. There were 75 municipal utilities participating and the total project cost was over $12.5 million.[42]


Anticipated benefits included reduced costs for consumers, deferred generation and distribution capacity investments, optimization of current generation operations, reduced overhead expenses for reading customer utility meters, and reduced environmental impacts.


In response to major weather events, companies such as Con Edison (ConEd) in New York are spending billions on “hardening” their system. As of May 2013 ConEd is installing new equipment and building higher perimeter walls to protect substations and installing smart switches to allow isolation of damaged areas and pre-emptively cut off power in flood-prone areas, among other actions.


Other eastern U.S. power companies are elevating their substations above potential flooding. Damage to the system by Hurricane Sandy resulted in over 1 million power outages and affected one-third of ConEd customers.[43] Smart grid technologies will help prevent this in the future.




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