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October 29, 2009

What The $69 Million Smart Grid Grant Will Mean to Vermont

The nearly $69 million dollar stimulus award Vermont utilities received from the federal Department of Energy (DoE) this week will have a much greater and long lasting effect on the Green Mountain State than hundreds of millions of dollars in stimulus band aids that we are also receiving. When the supplemental Medicaid and educations dollars are gone, we will have bought some much-needed time but still have a huge budget hole to fill. When the utilities finish building a smart grid statewide in the next few years, Vermont will have a stronger economy, a better job market, a cleaner environment, better broadband, a lower cost of living, and a stronger tax base to support the cost of government services with lower tax rates than would otherwise be possible. Almost sounds to be too good to be true but it isn't – assuming we do a good job with this money and the additional $69 million of investor and ratepayer money with which the utilities will match the grant.

By the end of 2012 Vermont will be the first state in the nation with a smart grid stretching border to border and from almost every consumer, through the transmission network, and back to generating sources. It's likely that DoE awarded us more than 2% of the total amount of money in the nationwide pool precisely because our size allows us to complete the project quickly and because we submitted the only application in the country which included every electric utility in the state in a massive and ambitious collaboration. We did promise to make detailed reports available on what worked and what didn't to the rest of the country.

We would have eventually done all this work and paid the whole cost ourselves. The way we distribute electricity is antiquated and wasteful. We consumers have neither the information nor mechanism for adjusting our usage to avoid high cost peaks. Now we will sometimes actually be paid for avoiding peak use because that's cheaper for the utility than buying peak power on the spot market. Only businesses the size of IBM have been able to afford sophisticated ways to keep peak usage and bills low; now the smallest businesses in the state will be able to have pretty much the same control. We pay for and build transmission and generation capacity for anticipated peaks. The more we can avoid the peaks, the less we have to build. Mass adoption of plug-in cars is unthinkable with a dumb grid; it would just collapse when they are all plugged in at 6PM.

If we had done the job ourselves with the amount of money the utilities can prudently raised, it would take us eight years instead of the three years we plan with the addition of the federal grant. We'll be leaders and we'll make mistakes; that's part of what the federal money is paying us for. But we'll also get the benefits five years earlier and we'll lead rather than lag the nation in this crucial technology.

Our utilities took a chance in banding together for one big ask instead of applying for smaller amounts separately as most other utilities (which bothered to apply) did. Only 100 out of more than 400 applications got funded. The answer could have just been "no". But they did envision a fast lane to the future; they did work together; the Department of Public Service, The Office of Economic Stimulus and Recovery, and the state's Congressional Delegation and the Governor all strongly supported the application, which is an excellent and persuasive document. The Governor took me along on a visit to Vice President Biden, who advised us that a unified application was the best way to assure that a whole coordinated program got funded – but pointedly and properly couldn't assure us that it would be accepted.

And we got the grant, phew. Now we have to deliver.

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