The answer to the aging infrastructure is to deploy 21st century smart grid technologies. AEP's gridSMART^SM project will reduce energy losses in our own equipment, lower operating costs, provide new services to customers, and allow them to better control energy usage and costs.

A pilot program involving 10,000 customers to test gridSMART^SM technology in South Bend, Ind., is under way. Our goal is to install 5 million smart meters throughout our service territory by 2015, but to do so we must receive regulatory approval for cost recovery. In Texas, we are deploying 1 million smart meters during the next several years. Nationwide, smart grid technologies could directly create up to 280,000 jobs and even more jobs indirectly. The transition to an advanced grid will enable new technologies such as plug-in hybrid electric vehicles, distributed renewable energy resources, smart appliances, and home automation software and hardware, according to a report from the Gridwise Alliance, of which AEP is a member.

Beginning in late 2008, about 10,000 AEP customers in South Bend, Ind., began participating in our first major rollout of gridSMART^SM technology.

Through the use of automated communications equipment, new “smart” meters and time-of-day rates, these customers are participating in a pilot program that will help determine if electricity users are ready to take more control over their usage and their energy bills.

The concept is that, given timely information and the ability to postpone some energy usage to a period of lower rates, customers will actively manage how much power they use and when they use it. The $7 million experiment, approved by the Indiana Utility Regulatory Commission, will allow customers to see how much energy they consume on a near real-time basis. Their meters, which incorporate state-of-the-art data collection and communications technology, will transmit customer usage to AEP daily. Customers will be able to see how much power they used per hour the previous day by calling up their account information online. By providing customers with more frequent and accurate information, we believe they will make better energy choices.

A critical part of the pilot is the availability of time-of-day rates. Residential customers can remain on a fixed-rate plan of 6.75 cents per kilowatt hour, or switch to time-of-day pricing. Under time-of-day rates, the off-peak rate is 5.981 cents per kilowatt hour while the peak rate will be 17.637 cents per kilowatt hour. Peak hours are from 2–6 p.m. Monday through Friday from May through September.

In addition to saving customers money, the pilot will test our ability to install and manage new equipment that will allow us to better control our distribution grid. Service interruptions, for example, can be reported automatically. Meters will no longer need to be read manually. Start and stop service requests can be handled more quickly and at lower cost. Outages generally will be restored faster.

But there’s more. Up to 500 customers are being solicited to participate in a program that allows AEP to control the customer’s cooling system from 2–6 p.m. weekdays from May through September. AEP would have the ability to raise the customer’s thermostat in two-degree increments, up to four degrees a day, or cycle off the central cooling unit for up to one-half of every hour of a load management event. In exchange, participating customers would receive $5 monthly credits toward their bill. We believe this will demonstrate our ability to reduce peak demand during heavy use periods, allowing us to defer new generation and distribution system upgrades.

AEP will run the pilot for one year to determine the costs and benefits of deploying this technology on a broader scale.

Video

See how a collaboration between AEP, Indiana Michigan Power, GE and Silver Spring Networks is taking us into a new "grid" frontier.