Skip to Content


Addressing Policy and Logistical Challenges to Smart Grid Implementation

Document Details

Information about this document as published in the Federal Register.

Document Statistics
Document page views are updated periodically throughout the day and are cumulative counts for this document including its time on Public Inspection. Counts are subject to sampling, reprocessing and revision (up or down) throughout the day.
Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble


Office of Electricity Delivery and Energy Reliability, Department of Energy.


Request for Information.


The Department of Energy (DOE) is seeking comments from interested parties on policy and logistical challenges that confront smart grid implementation, as well as recommendations on how to best overcome those challenges. DOE is undertaking this Request for Information (RFI) on behalf of the Administration and in consultation with key stakeholders from state regulatory bodies. The RFI will assist these parties Start Printed Page 57007as they seek to assure smart grid deployments benefit consumers, the economy and the environment. In particular, comments on the RFI will help inform the Administration's analysis of policy challenges and possible solutions being developed by the Smart Grid Subcommittee of the National Science and Technology Council's Committee on Technology. The Subcommittee seeks to base its analysis on an up-to-date understanding of the context in which smart grid technologies, business models and policies operate. This is the third in a series of RFIs issued by DOE regarding smart grid implementation. Prior RFIs sought comment on data access, data usage and privacy issues, and on communications requirements for the smart grid. In this RFI, DOE seeks specific input on: the best way to define the term “smart grid” for policymaking purposes; the consumer-level benefits from, and challenges to, smart grid deployment; the benefits and challenges associated with smart grid implementation on the “utility side” of the meter; the ways in which policy makers at all levels of government can share experience and resources; and the broader, economy-wide benefits and challenges associated with the smart grid. In so doing, this RFI avoids duplicating questions that were raised in prior RFIs.


Comments must be transmitted or postmarked by no later than November 1, 2010.


You may submit comments identified by “Smart Grid RFI: Addressing Policy and Logistical Challenges” via any of the following methods:

Federal eRulemaking Portal: (following the instructions for submitting comments);

E-mail: Include “Smart Grid RFI: Addressing Policy and Logistical Challenges” in the subject line of the message; or

Mail: U.S. Department of Energy, Office of Electricity Delivery and Energy Reliability, 1000 Independence Avenue, SW., Room 8H033, Washington, DC 20585.

Start Further Info


Michael Li, Electricity Policy Specialist (202) 287-5718. For media inquiries you may contact Tiffany Edwards at 202-586-6683.

End Further Info End Preamble Start Supplemental Information



As noted in earlier RFIs, the smart grid has significant promise. The smart grid better integrates information, communication, and intelligent control technology, into the nation's electrical system. It will offer new tools to maintain reliability and improve flexibility. It has the potential to improve power quality, manage power scarcities and reduce transmission congestion costs. A truly smart grid should achieve environmental goals at lower cost than the traditional grid, be able to respond more quickly to natural or man-made outages and, overall, operate the electrical system more efficiently without reducing system cyber security or reliability.

President Obama's energy and climate change policy aims to reduce harmful greenhouse gas emissions and U.S. dependence on foreign oil, to create jobs, and to help U.S. industry compete successfully in global markets for clean energy technology. Smart grid deployment is an important component of the Administration's broader strategy. The American Recovery and Reinvestment Act of 2009 (“Recovery Act”) took large, initial steps to accelerate the smart grid transition. The Recovery Act included $11 billion for smart grid technologies, transmission system expansion and upgrades, and other investments to modernize and enhance the electric transmission infrastructure.

To build on the Recovery Act's initiatives, the National Science and Technology Council's (NSTC) Committee on Technology has established a Subcommittee on Smart Grid, co-led by DOE's Office of Electricity Delivery and Energy Reliability and the Department of Commerce's National Institute of Standards and Technology (​news/​nstc_​subcommittee). The Subcommittee on Smart Grid is working to ensure the federal government develops and executes a long-term, comprehensive strategy in partnership with the states that will further President Obama's comprehensive energy and climate plan, as well as the Recovery Act's effort to catalyze the development of a smarter grid. The Subcommittee will develop policy options and recommendations for the Administration as a whole and guide federal-state cooperative efforts. It will investigate emerging technologies and provide analysis about ways to advance the smart grid in a cost-effective and appropriate manner.

DOE's Office of General Counsel issued two RFIs on May 11, 2010 on smart grid policy issues. (75 FR 26203 and 75 FR 26206) The first RFI sought comments on ongoing federal, state and private sector efforts to make more effective use of consumer energy usage data, while at the same time safeguarding consumer privacy. The second RFI sought comments to assist the Department in identifying the present and future communications needs of electric utilities as smart grid technologies are deployed more broadly. This RFI seeks to collect information and open a dialogue about a wide range of additional issues dealing with smart grid technology, applications, consumer interaction, policy initiatives and economic impact.


The smart grid has the potential to add devices and applications that improve power quality, reduce transmission congestion costs, read meters and provide prompt feedback that allows better decision making; better synchronize consumption with generation; help integrate variable renewable generation and electric vehicles into the electric system; detect and address equipment problems and outages; and provide central and end-user control over energy consumption. The United States can be a global leader in developing these innovative technologies. For many reasons, then, it is important to continue to research, develop and deploy smart grid systems.

DOE is aware that technology, business, consumer and regulatory issues interact in complicated ways. The smart grid will be composed of numerous vast, evolving and interrelated systems including communication networks, sensors on transmission and distribution systems such as phasor measurement units (PMU) and advanced metering infrastructure (AMI), and controls such as programmable communicating thermostats. It will facilitate changes in how electricity is produced, distributed, consumed and conserved.

DOE also recognizes that while it may be possible to estimate the benefits of current efforts to deploy smart grid technologies and applications, it may be unrealistic to precisely quantify their future impacts because the smart grid is not fully developed and its future applications are likely to change. Nevertheless, even unavoidable uncertainty should not deter federal and state authorities, utilities or other interested parties from assessing current implications of, barriers to, and the best-available estimates of the likely impact of making the grid smarter. For example, certain smart grid and demand-response applications have been deployed by utilities and electric cooperatives for Start Printed Page 57008many years.[1] These applications include automated collection of detailed meter data, direct load control, and systems that vary prices based on typical or actual grid conditions at the time the customer used power. We seek to learn from those preexisting efforts, as well as newer projects and pilots.

Request for Information

The following questions cover the major areas we seek comment on. They are not a determination of the final topics that DOE and the NSTC Smart Grid Subcommittee will address, and commenters may address any topic they believe to have important implications for smart grid policy regardless of whether this document mentions it.

In response to any question that asks about smart grid technologies broadly defined, please describe the set of smart grid technologies your response considers. To aid the discussion of the relevant issues, commenters are welcome to use the following categories to classify the technologies they discuss, adding any clarifying language they view as appropriate.

  • Instrumenting and automating the transmission and generation system
  • Distribution automation
  • Upgraded metering, such as AMI or even enhanced technologies that improve the capabilities of traditional AMR
  • Consumer facing programs such as feedback, demand response, energy efficiency, and automation strategies
  • Integrating new end user equipment like distributed generation and electric vehicles

Commenters can assume a high degree of general knowledge on the part of DOE and the Subcommittee. Commenters are encouraged to cite or include relevant data and analyses in their responses. In addressing the following questions, we ask stakeholders to be concise. We primarily seek facts and concrete recommendations that can augment that general knowledge. We encourage stakeholders to use concrete examples of benefits, costs, and challenges or to bring novel or underappreciated sources of evidence to our attention wherever possible.

Definition and Scope

The deployment of technology to make the nation's electric grid a more interactive, efficient and responsive system is already underway. At the early stages of any major technological shift, stakeholders often use the same term-of-art to mean different things which can lead to miscommunication. To minimize confusion as we identify policy challenges and recommendations, this RFI uses the broad definition of Smart Grid laid out in Title XIII of the Energy Independence and Security Act of 2007 (EISA). Title XIII mentions that the smart grid uses communications, control, and information technology to optimize grid operations, integrate distributed resources including renewable resources, increase energy efficiency, deploy demand response, support electric vehicles, and integrate automated, interactive interoperable consumer devices. We encourage commenters to reference the full text of EISA section 1301.

We invite comment however on whether this is the best way to define the smart grid. What significant policy challenges are likely to remain unaddressed if we employ Title XIII's definition? If the definition is overly broad, what policy risks emerge as a result?

We also invite comments on the geographic scope of standardization and interconnection of smart grid technologies. Should smart grid technologies be connected or use the same communications standard across a utility, state, or region? How does this vary between transmission, distribution, and customer-level standards? For example, is there need to go beyond ongoing standards development efforts to choose one consumer-facing device networking standard for states or regions so that consumers can take their smart appliances when they move and stores' smart appliance will work in more than one service area?

Interactions With and Implications for Consumers

Typical consumers currently get limited feedback about their daily energy consumption patterns and associated costs. They also have limited understanding of variations in the cost of providing power over the course of the day and from day to day. Many smart grid technologies aim to narrow the typical consumers' knowledge gap by empowering consumers with greater knowledge of and ability to control their consumption and expenditures. This vision transforms many consumers' relationship with the grid, which prompts us to ask the following questions.

  • For consumers, what are the most important applications of the smart grid? What are the implications, costs and benefits of these applications? What new services enabled by the smart grid would customers see as beneficial? What approaches have helped pave the way for smart grid deployments that deliver these benefits or have the promise to do so in the future?
  • How well do customers understand and respond to pricing options, direct load control or other opportunities to save by changing when they use power? What evidence is available about their response? To what extent have specific consumer education programs been effective? What tools (e.g. education, incentives, and automation) increase impacts on power consumption behavior? What are reasonable expectations about how these programs could reshape consumer power usage?
  • To what extent might existing consumer incentives, knowledge and decision-making patterns create barriers to the adoption or effective use of smart grid technologies? For instance, are there behavioral barriers to the adoption and effective use of information feedback systems, demand response, energy management and home automation technologies? What are the best ways to address these barriers? Are steps necessary to make participation easier and more convenient, increase benefits to consumers, reduce risks, or otherwise better serve customers? Moreover, what role do factors like the trust, consumer control, and civic participation play in shaping consumer participation in demand response, time-varying pricing, and energy efficiency programs? How do these factors relate to other factors like consumer education, marketing and monthly savings opportunities?
  • How should combinations of education, technology, incentives, feedback and decision structure be used to help residential and small commercial customers make smarter, better informed choices? What steps are underway to identify the best combinations for different segments of the residential and commercial market?
  • Are education or communications campaigns necessary to inform customers prior to deploying smart grid applications? If so, what would these campaigns look like and who should deploy them? Which related education or public relations campaigns might be attractive models?
  • What should federal and state energy policymakers know about social norms (e.g. the use of feedback that compares a customers' use to his neighbors) and habit formation? What are the important lessons from efforts to persuade people to recycle or engage in other environmentally friendly activity? What are the implications of these Start Printed Page 57009insights for determining which tasks are best automated and which should be subject to consumer control? When is it appropriate to use social norm based tools?
  • How should insights about consumer decision-making be incorporated into federal-state collaborative efforts such as the Federal Energy Regulatory Commission's (FERC) National Action Plan on Demand Response?

Interaction With Large Commercial and Industrial Customers

Large commercial and industrial customers behave differently than residential consumers and small businesses. They regularly use sophisticated strategies to maximize their energy efficiency, to save money and to assure reliable business operations. Indeed, some already are or others are seeking to participate directly in wholesale energy and ancillary services markets. Please identify benefits from, and challenges to, smart grid deployment that might be unique to this part of the market and lessons that can be carried over to the residential and small business market. Please identify unmet smart grid infrastructure or policy needs for large customers.

Assessing and Allocating Costs and Benefits

Regulators pay a great deal of attention to the costs and benefits of new investments, appropriate allocation of risk and protection of vulnerable customer segments. The many unknowns associated with smart grid programs make these ubiquitous questions particularly challenging, which suggests a great need to share perspectives and lessons.

  • How should the benefits of smart grid investments be quantified? What criteria and processes should regulators use when considering the value of smart grid applications?
  • When will the benefits and costs of smart grid investments be typically realized for consumers? How should uncertainty about whether smart grid implementations will deliver on their potential to avoid other generation, transmission and distribution investments affect the calculation of benefits and decisions about risk sharing? How should the costs and benefits of enabling devices (e.g. programmable communicating thermostats, in home displays, home area networks (HAN), or smart appliances) factor into regulatory assessments of smart grid projects? If these applications are described as benefits to sell the projects, should the costs also be factored into the cost-benefit analysis?
  • How does the notion that only some customers might opt in to consumer-facing smart grid programs affect the costs and benefits of AMI deployments?
  • How do the costs and benefits of upgrading existing AMR technology compare with installing new AMI technology?
  • How does the magnitude and certainty of the cost effectiveness of other approaches like direct load management that pay consumers to give the utility the right to temporarily turn off air conditioners or other equipment during peak demand periods compare to that of AMI or other smart grid programs?
  • How likely are significant cost overruns? What can regulators do to reduce the probability of significant cost overruns? How should cost overruns be addressed?
  • With numerous energy efficiency and renewable energy programs across the country competing for ratepayer funding, how should State Commissions assess proposals to invest in smart grid projects where the benefits are more difficult to quantify and the costs are more uncertain?
  • What are appropriate ways to track the progress of smart grid implementation efforts? What additional information about, for example, customer interactions should be collected from future pilots and program implementations? How are State Commissions studying smart grid and smart meter applications in pilots? In conducting pilots, what best practical approaches are emerging to better ascertain the benefits and costs of realistic options while protecting participants?
  • How should the costs of smart grid technologies be allocated? To what degree should State Commissions try to ensure that the beneficiaries of smart grid capital expenditures carry the cost burdens? Which stakeholder(s) should bear the risks if expected benefits do not materialize? How should smart grid investments be aligned so customers' expectations are met?
  • When should ratepayers have the right to opt out of receiving and paying for smart grid technologies or programs like meters, in home displays, or critical peak rebates? When do system-wide benefits justify uniform adoption of technological upgrades? How does the answer depend on the nature of the offering? How should regulators address customer segments that might not use smart grid technologies?
  • How might consumer-side smart grid technologies, such as HANs, whether controlled by a central server or managed by consumers, programmable thermostats, or metering technology (whether AMR or AMI), or applications (such as dynamic pricing, peak time rebates, and remote disconnect) benefit, harm, or otherwise affect vulnerable populations? What steps could ensure acceptable outcomes for vulnerable populations?

Utilities, Device Manufacturers and Energy Management Firms

Electricity policy involves the interaction of local distribution utilities, bulk power markets and competitive markets for electrical appliances and equipment. Retail electricity service is under state and local jurisdiction. Generally, bulk power markets are under FERC jurisdiction. Appliances comply with federal safety and efficiency rules. Smart grid technologies will change the interactions among these actors and should create new opportunities for federal-state collaboration to better serve citizens.

Greater collaboration seems essential. Some state regulatory agencies already oversee energy efficiency programs that help ratepayers acquire equipment like energy efficient appliances. Those appliances also are subject to federal regulatory oversight. As the smart grid evolves, these types of ties are likely to deepen. Moreover, EISA foresees a federal role in developing potentially mandatory standards for some smart grid equipment and voluntary standards for smart-grid enabled mass-produced electric appliances and equipment for homes and businesses. Many commentators suggest that utilities may lack appropriate incentives to invest in the most cost effective smart grid infrastructure and allow that infrastructure to be used to conserve energy, because most service providers generate revenue based on the number of kilowatt hours sold and pass through the capital costs of things like smart grid infrastructure. If this is accurate, then those disincentives are an impediment to achieving national and state goals and, therefore, merit state and federal policy makers' attention.

In issuing this RFI, DOE is mindful that the states oversee retail electric service and that state regulation differs state by state. Within states different types of service providers may be subject to different regulatory schemes depending, for example, on whether the service provider is investor owned, publicly owned or a cooperative. Recognizing the primary role of states in this area, we ask the following questions:Start Printed Page 57010

  • How can state regulators and the federal government best work together to achieve the benefits of a smart grid? For example, what are the most appropriate roles with respect to development, adoption and application of interoperability standards; supporting technology demonstrations and consumer behavior studies; and transferring lessons from one project to other smart grid projects?
  • How can federal and state regulators work together to better coordinate wholesale and retail power markets and remove barriers to an effective smart grid (e.g. regional transmission organization require that all loads buy “capacity” to ensure the availability of power for them during peak demand periods, which makes sense for price insensitive loads but requires price sensitive loads to pay to ensure the availability of power they would never buy)?
  • How will programs that use pricing, rebates, or load control to reduce consumption during scarcity periods affect the operations, efficiency, and competiveness of wholesale power markets? Will other smart grid programs have important impacts on wholesale markets? Can policies improve these interactions?
  • Do electric service providers have the right incentives to use smart grid technologies to help customers save energy or change load shapes given current regulatory structures?
  • What is the potential for third-party firms to provide smart grid enabled products and services for use on either or both the consumer and utility side of the meter? In particular, are changes needed to the current standards or standard-setting process, level of access to the market, and deployment of networks that allow add-on products to access information about grid conditions? How should the interaction between third-party firms and regulated utilities be structured to maximize benefits to consumers and society?
  • How should customer-facing equipment such as programmable communicating thermostats, feedback systems, energy management systems and home area networks be made available and financed? Are there consumers behavior or incentive barriers to the market achieving efficient technology adoption levels without policy intervention?
  • Given the current marketplace and NIST Smart Grid Interoperability Panel efforts, is there a need for additional third-party testing and certification initiatives to assure that smart grid technologies comply with applicable standards? If there is a need for additional certification, what would need to be certified, and what are the trade-offs between having public and private entities do the certification? Is there a need for certifying bodies to oversee compliance with other smart grid policies, such as privacy standards?

Commenters should feel free to describe current and planned deployments of advanced distribution automation equipment, architectures, and consumer-facing programs in order to illustrate marketplace trends, successes, and challenges. And they should feel free to identify any major policy changes they feel would encourage appropriate deployment of these technologies.

Long Term Issues: Managing a Grid With High Penetration of New Technologies

Significant change in the technologies used to generate power and to keep supply and demand balanced is likely to occur over the foreseeable future. We invite comments on the steps that should be taken now to give the grid the flexibility it will need to deal with transitions that are likely in the next few decades. Commenters might address the following questions, some of which have more immediate implications.

  • What are the most promising ways to integrate large amounts of electric vehicles, photovoltaic cells, wind turbines, or inflexible nuclear plants? What approaches make sense to address the possibility that large numbers of other consumer devices that might simultaneously increase power consumption as soon as power prices drop? For instance, what is known about the viability of and tradeoffs between frequently updated prices and direct load control as approaches to help keep the system balanced? How do factors like the speed of optimization algorithms, demand for reliability and the availability of grid friendly appliances affect those trade-offs?
  • What are these strategies' implications for competition among demand response, storage and fast reacting generation? What research is needed to identify and develop effective strategies to manage a grid that is evolving to, for example, have an increasing number of devices that can respond to grid conditions and to be increasingly reliant on variable renewable resources?
  • What policies, if any, are necessary to ensure that technologies that can increase the efficiency of ancillary services provision can enter the market and compete on a level playing field?
  • What policies, if any, are necessary to ensure that distributed generation and storage of thermal and electrical energy can compete with other supply and demand resources on a level playing field?
  • What barriers exist to the deployment of grid infrastructure to enable electric vehicles? What policies are needed to address them?

Reliability and Cyber-Security

We invite comment on the reliability opportunities and challenges that smart grid technologies create, including: What smart grid technologies are or will become available to help reduce the electric system's susceptibility to service disruptions?

  • What policies are needed to facilitate the data sharing that will allow sensors (e.g., phasor measurement units) and grid automation to achieve their potential to make reliability and performance improvements in the grid? Is there a need to revisit the legal and institutional approaches to generation and transmission system data collection and interchange?
  • What is the role of federal, state, and local governments in assuring smart grid technologies are optimized, implemented, and maintained in a manner that ensures cyber security? How should the Federal and State entities coordinate with one another as well as with the private and nonprofit sector to fulfill this objective?

Managing Transitions and Overall Questions

The following questions focus on managing incremental change during the gradual evolution of the grid that may transform the power sector over the next few decades.

  • What are the best present-day strategies for transitioning from the status quo to an environment in which consumer-facing smart grid programs (e.g., alternative pricing structures and feedback) are common? What has been learned from different implementations? What lessons fall into the “it would have been good to know that when we started” category? What additional mechanisms, if any, would help share such lessons among key stakeholders quickly?
  • Recognizing that most equipment on the electric grid, including meters, can last a decade or more, what cyber security, compatibility and integration issues affect legacy equipment and merit attention? What are some strategies for integrating legacy equipment into a robust, modernized grid? What strategies are appropriate for investing in equipment today that will be more valuable if it can delay obsolescence by Start Printed Page 57011integrating gracefully with future generations of technology?
  • How will smart grid technologies change the business model for electric service providers, if at all? What are the implications of these changes?
  • What are the costs and benefits of delaying investment in metering and other smart grid infrastructure while the technology and our understanding of it is rapidly evolving? How does that affect the choice of an appropriate time to invest?
  • What policy changes would ensure that the U.S. maintains global competiveness in smart grid technology and related businesses?
  • What should be the priority areas for federally funded research that can support smart grid deployment?

Finally, as noted at the outset, we invite commenters to address any other significant issues that they believe implicate the success or failure of the transition to smart grid technology.

Start Signature

Issued in Washington, DC, on September 13, 2010.

Patricia Hoffman,

Assistant Secretary.

End Signature End Supplemental Information


1.  Fed. Energy Regulatory Comm'n, Assessment of Demand Response and Advanced Metering, 8, 65 (Dec. 2008), available at​legal/​staff-reports/​12-08-demand-response.pdf.

Back to Citation

[FR Doc. 2010-23251 Filed 9-16-10; 8:45 am]