But some big changes will be needed to get there, according to the creators of the “West Virginia Smart Grid Implementation Plan” — changes in infrastructure and regulations but, first, a change in the regulatory process itself.

“It means moving away from just considering operational, or utility, benefits against the cost of a new system,” said Steve Pullins, president of energy consultancy Horizon Energy Group and one of the participants in the planning process.

“We have to consider how that new system benefits consumers directly and society at large and add that to the whole process.”

Smart Grid Advantages

The smart grid is a set of existing and emerging technologies that would make the electric grid — primarily the local distribution grids — more flexible, interactive and efficient.

It includes devices that let utilities turn off home appliances temporarily when demand is peaking, for example, and others that let consumers set their dishwashers and clothes dryers to run at night, when demand is low.

It also includes a regulatory environment that allows for nontraditional mechanisms, such as net metering that allows customers who have their own generators to send extra electricity onto the grid and time-of-day pricing to signal peaks and valleys in demand.

Taken together, the full smart grid suite increases reliability, decreases costs and puts off the need for expensive new generation capacity.

Costs and Benefits

The “West Virginia Smart Grid Implementation Plan,” the first statewide smart grid plan in the nation, according to its authors, details steps to smarter local electric distribution grids for the state and lays out the expected costs and benefits.

The cost for full implementation is about $1.9 billion, represented as the present value of the cost over 20 years.

The benefit: $12.6 billion.

Those benefits would be spread out. Consumers would gain the greatest share, at $7.5 billion, and utilities would gain about $1.3 billion, with the remainder accruing to West Virginia society and U.S. society in general.

The benefits come primarily in reliability, according to Pullins.

“If you take a look at the conditions in West Virginia, there’s a lot of cost associated with the outages that occur in the state,” Pullins said. “Between outages and power quality events, the state loses more than $1 billion a year in business — just because the doors aren’t open or the cash registers aren’t working.”

Smart grid technologies can route power around a problem or minimize the area affected by an outage, he said.

Other major benefits come through reductions in the price of electricity and through consumers’ ability to sell their own generation onto the grid.

So, Let’s Do It — Right?

An investment that brings more than $10 billion in benefits seems straightforward enough. But it’s not quite that simple, according to Steve Bossart of the U.S. Department of Energy’s National Energy Technology Laboratory, another plan participant.

“In the past, public service commissions only considered the cost to the utility and the benefit to the utility in the business case that the utility would bring forward,” Bossart said.

In this analysis, that would put $1.9 billion in costs against $1.3 billion in utility benefits. That’s a “no-go,” in Pullins’ words.

“To make the holistic business case, a public service commission has to consider all of the benefits,” Bossart said. “As you can see from our analysis, the benefits significantly outweigh the costs when all the benefits are considered.”

“A definite go,” in Pullins’ view.

It’s unconventional. But commissions in some states, such as California, Ohio and Texas, have begun to take that leap, Pullins said.

Consumer understanding and engagement in the process can support a commission in an analysis that takes broader benefits into consideration, he said.

Next Steps

A good next step could be a series of meetings across the state for education and visioning, Pullins said.

Such meetings were conducted by Ohio’s commission in 2007, he said by way of example, but they also could be conducted by some other body that has a role in smart grid implementation.

And sooner is better than later, according to the plan.

“Every year of delay in the implementation of a smart grid causes a drop of about $750 million in net present value,” the plan reads.

Implementation could begin as early as 2010 and, on the schedule proposed in the plan, would take eight years.

Development of the “West Virginia Smart Grid Implementation Plan” was led by NETL with support from electric utilities American Electric Power and Allegheny Energy/Allegheny Power, the state Division of Energy, Energy Consultants SAIC and Horizon Energy Group, West Virginia University and the DOE Office of Electricity Delivery and Energy Reliability.