Exactly who is in charge of regulating energy in the US?

Most people would probably say the Department of Energy (DOE), but the role of other federal agencies like the Department of Agriculture, as well as appointed commissions like FERC and CFTC, play equally significant but often largely invisible roles. With so many players, and Congress hesitant to provide direction on broad policy direction, the White House has become the de facto setter of energy policy and implementation.

This morning, the White House took a bold stand on the electricity center stage when it announced a multi-pronged effort to update the American electrical transmission system and make it “smarter.”

“Even in today’s information age, many utilities don’t have real-time information about the state of the grid,” the White House said in announcing a new report, task force and funding for electricity infrastructure. “A modernized electric grid can bridge these lingering information gaps.”

DOE Secretary Steven Chu noted that Edison would have no idea what to do with an LED or an MP3 compression system, but would have no problem navigating the electrical transmission system. It has barely changed since his time.

“The grid has to facilitate the growth of electric vehicles and renewables,” Chu said in the announcement this morning. Chu hopes that by monitoring power – where, when and how its used – consumers and power companies will be able to store power overnight, incorporate intermittent generators like wind and solar and generally get more bang for their buck.

“New ways of generating electricity, from the largest wind turbines to the smallest rooftop [solar] panels, are demanding new degrees of flexibility and adaptability in the grid,” said John Holdren, director of the White House Office of Science and Technology Policy and co-chair of the President’s Council of Advisors on Science and Technology, with the announcement this morning.

With integration of modern information technology systems, the country will see a far greater return on investment (ROI) from energy and will be able to better compete in the global market, Chu said. In order to facilitate the most effective investments, the White House released a report with its statement this morning, A Policy Framework For The 21st Century Grid: Enabling Our Secure Energy Future. The report sets out priorities is to best direct government investments.

“We see incredible opportunities for technology investment,” Chu said. He added that certain private sector groups, such as GE with its combined cycle thermal generators, are already jumping on the opportunity.

Holdren added, “a smarter grid means an empowered consumer, a consumer with unprecedented knowledge of his or her energy use and a consumer able to use that knowledge to modify energy usage.”

Other also noted that a smarter grid will transform the way consumers think of energy use.

“The smart meters provide the interface between the networks and the users,” said Phil Weiser, senior advisor for the National Economic Council.

The announcement answers some questions about the priorities of a fragmented federal policy that has been largely uncoordinated, not only among federal agencies but also between federal agencies, the private sector and various energy sector players that include utilities, transmission grids and power generators.

Rapid Response?

The White House initiatives will include the creation of a Renewable Energy Rapid Response Team, co-led by the White House Council on Environmental Quality, the Department of Interior and the DOE, which is intended to coordinate smart grid efforts through various agencies and geographic regions.

The White House initiatives also aim to to engage consumers in smart grid, with the launch of Grid 21, a new private sector project that will promote the new technology to consumers. The Department of Energy (DOE) also renewed commitments to improving consumer access to energy information by creating a crowd-sourced map to track progress, a data-driven competition on home energy efficiency, and said it would work closely with the Energy Information Administration (EIA) on efforts to measure progress.

Among the initiatives is also $250 million in loans for smart-grid technology deployment in rural areas from the US Department of Agriculture’s Rural Utility Service promised.

“The future is bright for this country. We want to make it that, as it brightens, it brightens for all Americans regardless of where they live and raise their families,” said Agriculture Secretary Tom Vilsack.

In addition, the White House announced it will be expanding partnerships with states and stakeholders on smart grid investments. States will be providing matching contributions of $5.5 billion to the $4.5 billion for grid modernization already invested by the federal stimulus under the American Recovery and Reinvestment Act.

The Dark Side Of The Grid

“Modernizing our nation’s electric grid plays a critical role in advancing America’s clean energy economy,” said Chair of the White House Council on Environmental Quality Nancy Sutley. “These next steps will help us transition toward the economy of the future and provide a boon for domestic job growth.”

Despite all the hype, the White House did not fail to mention some of the possible drawbacks in bringing IT to energy, including the security and privacy concerns of consumers whose every movement on the grid could now be traced and tracked by multiple parties.

“There could really be some serious consequences if data isn’t secure. We in the DOE do think this is very serious and we are trying to cooperate with all the other agencies in [addressing] this,” Chu said. “This is not something that’s put on the back burner. Its very much on the front burner.”

Picture: Energy Secretary Steven Chu looks over his notes before testifying to the Senate Appropriations Committee Energy and Water Development Subcommittee on Capitol Hill May 18, 2011 in Washington, DC.