FierceEnergy, a B2B energy industry newsletter, announced its list of the 15 most influential players in the energy industry in 2011. Flattered to say that I made the list, which gives us a great platform to further promote the innovative ideas you read about on this blog, in my books and other publications, and on this website. 2012 holds great potential, and more news to follow. Stay tuned!

In an article today titled Outages drive smart grid, and muni legislation: Storms + outage anger = muni movement, Phil Carlson of IntelligentUtility connects seemingly disparate events: Boulder's recent election rejecting its IOU, Xcel Energy, moving forward with municipalization, and local outrage over slow restoration of electric service after outages associated with bizarre early winter storms in New England. Rather than arguing between continued IOU ownership and municipalization, whereby a city buys the IOU assets and takes over control, I suggested a middle path in my comment, restated below, under the title, "Municpalization Lite."

The path to municipalization, as Boulder will no doubt discover as it proceeds down that path, will be expensive and complex. Unwinding the investment by IOU in assets required to operate the municipal distribution grid could take years of haggling and in the end, cities and citizens will be stuck with a large debt. The price of independence will be high in that scenario, but no doubt, some communities, like Boulder, will consider it a bargain at any price.

Consider instead a more gradual path to energy independence, whereby city leadership begins to invest in distributed energy resources such as combined heat and power gensets in its office buildings, solar PV panels on its rooftops, EV charging stations in its parking garages, energy efficiency retrofits of its building envelopes and electrical appliances, including spray foam insulation, high efficiency lighting, and high tech HVAC systems. By working with its constiuencies, including economic development agencies, chambers of commerce, neighborhood associations, and school districts, city leadership can expand its influence and reduce local reliance on grid power piecemeal as technology matures, gradually taking more control over their collective energy destiny, while allowing the IOU to do what it does best, operate an efficient distribution grid. And reducing grid consumption - including reducing peak consumption - may do more to get an IOU's attention than anything else.

Rather than look at this as a black and white debate between investor-owned grid and city-owned grid, perhaps we should expand the discussion into a future scenario involving a smart consumer, one that envisions grid-delivered kWhs, on-site kWhs, and negawatts, blended in harmony via a smart grid?

Along with the development of the atomic bomb, the digging of the Panama Canal, and landing the first men on the moon, the construction of a transcontinental railroad was one of the United States' greatest technological achievements. Railroad track had to be laid over 2,000 miles of rugged terrain, including mountains of solid granite.

The first spikes were driven in 1863, in the midst of the Civil War. Two companies competed to lay as much track as possible. The Central Pacific built east from Sacramento, Calif., while the Union Pacific built west from Omaha, Neb....On May 10, 1869, at Promontory Summit, Utah, a golden spike was hammered into the final tie. Building the Transcontinental Railroad

Connecting the country with rail lines was the critical network infrastructure task of the 19th Century, and the impacts were dramatic. Costs plummeted as goods moved to population centers in the East and people moved to wide open spaces in the West. The creation of the electric grid played a similar role in the 20th century, transforming the economy and lifestyles of Americans, indeed of modern economies throughout the world.

Yesterday, we highlighted the complexities inherent in today's electric grid, the great engineering achievement of the 20th Century. The grid started off as disparate local grids that served population centers, with large investor-owned utilities snatching up the prime territories where dense populations drove solid economic projections. Cities left out of that equation built their own distribution grids, creating municipal departments. In time, the rural areas electrified with help from the federal government in the form of cheap loans, and the electric cooperative created the third leg of the stool.

For reliability purposes, we began connecting these disparate systems to create the grid we have today, divided into three major grids - the Eastern grid, the Western grid, and the Texas grid. Regional Transmission Operators (RTOs) bring together transmission systems for econmomic efficiency and reliability purposes. A principal task of an RTO is to balance generation with loads to provide economic dispatch of generation assets and to ensure system harmony.

Unlike the railroads which stretched to connect the East with the West, the grid benefits when the North is connected to the South. Weather is a key driver in electricity consumption, conferring an advantage on a grid that is oriented north-south. By connecting generation assets in the south with loads in the north, and vice versa, northern generation with southern load, a well designed RTO can take advantage of climate differences to more economically operate capital-intensive generation plant.

Clearly, the paragraph above simplifies a tremendously complex operation. A key task for 21st Century grid operators wil be to modernize the 20th Century grid from top to bottom, turning it into an Advanced Smart Grid. Beyond the integration of information and communication technology at all levels, this transition must also involve a comprehensive review of business processes, regulatory processes, and engineering processes, and economic principles at the wholesale and retail levels, with a shared goal to bring about new levels of efficiency. And as we continuously tweak our system design and operation parameters to find greater efficiency, we should keep our minds open to radical new concepts.

Whether we realize it or not, we are on the path to redesigning the grid into a new asset, to meet the needs of the 21st Century. This collection of activities is referred to as Grid Optimization, and it will become our focus in coming years. Even as we look backwards to respect what our forefathers created in the 19th and 20th Centuries, we must retrain our sights to the future, because it is rushing at us faster than we think. Our work likes ahead, in building on what our parents and grandparents left us.

The National Academy of Engineering lists the 20 Greatest Engineering Acheivements of the 20th Century - right at the top? You guessed it, electrification. But lest we be tempted to rest on our laurels, we have change afoot, and there's certainly more work to be done - here in the US, we are utterly dependent on this energy ecosystem we have created, but look at what we have created! The complexity astounds the casual observer, and going deeper in, its easy to get lost in the arcane discussions of regulatory policy and stakeholder equity. Sure the grid is incredibly reliable, but certainly there is ample room for far more efficiency. Consider just the regulatory framework overseeing this engineering marvel. We'll start there.

At the federal level, we have the Federal Energy Regulatory Commission (FERC), the Federal Communications Commision (FCC), the National Energy Reliability Corporation (NERC), the Department of Energy (DOE), the Environmental Protection Agency (EPA), the Interstate Oil and Gas Compact Commission, the Office of Surface Mining (OSM), the Mine Safety and Health Administration (MSHA) - I'll stop here, but I could go on ... and I haven't even mentioned the US Congress and the courts.

To ensure reliable operations on this grid that operates by keeping generation and load in balance, we have regional transmission organizations (RTOs) sometimes also called independent system operators (ISOs), as depicted in the map above. Here in Texas we have the amazing disconnected ISO island called ERCOT.

Moving down to the state level, state regulatory commissions and legislatures and governors oversee investor-owned utilities (IOUs), Transmission and Distribution utilities and retail electric providers. City councils and boards oversee our municipallly-owned utilities (MOUs) and member-owned cooperatives have their boards of directors.

According to the US Energy Information Administration (EIA), there are 210 investor-owned electric utilities that account for 67 percent of revenue, 2,009 publicly-owned electric utilities (13% of revenue), and 883 cooperatives (10% of revenue). The Federal government is also in the power game, with nine electric utilities managed by the Army Corps of Engineers; the Bureau of Indian Affairs and the Bureau of Reclamation in the Department of the Interior, the International Boundary and Water Commission in the Department of State, the Power Marketing Administrations in the Department of Energy (Bonneville, Southeastern, Southwestern, and Western), and the Tennessee Valley Authority (TVA).

We didn't design the electric system to be this complex, but it certainly turned out complex. Understanding how the system works requires more than a little knowledge about power engineering, telecommunications, business and economics, government and politics. I guess the system works - its hard to argue with success. But with the advent of technology changes embodied in the smart grid, and the prospect of a constrained world economy for the foreseeable future, we have an obligation to update this system to bring about more simplicity and bring more efficiency into the picture - this can't be the finished state of our electric system, can it?

Watch this space for more on this subject, I'm just getting wound up.