Monica Trauzzi: We’re beginning to see some of the impacts of investments made through the Smart Grid Investment Grant program. What are the reliability improvements that you can point to directly from the investments made?

Patricia Hoffman: Well, it’s fantastic because we’ve seen a lot of exciting things happen in the electric sector. But first of all I’d like to step back and talk about grid modernization. Grid modernization is the ability to improve the operations of the electric grid by adding information technology. So it will improve the reliability, resiliency, flexibility and even innovation in the electric sector. So with respect to reliability, what we’ve been focusing on is a couple different things. First of all, the ability to reduce peak on the system. Second is to defer building of generation. And third is operational improvements. So, for example, Sioux Valley Electric has been able to reduce peak on their system 5 to 25 percent with participation of their customers through critical peak pricing programs. Oklahoma Gas and Electric, through their pricing programs, have been able to demonstrate the deferring of building 170 megawatts of power generation. With respect to system improvements, the Western Interconnection has been using synchrophasers or sensors on the transmission system to be able to identify oscillations on their systems. But these sensors provide data to utility operators 30 to 60 times a second. So a great fidelity of information on the operations of the system.

Monica Trauzzi: We’ve seen some resistance, though. Are you concerned about the smart meter opt-out programs that we’ve seen in some localities throughout the country? And what do those opt-out programs say about the overall success of DOE’s program?

Patricia Hoffman: Well, first of all, the opt-out discussion is a very important discussion to have. When you’re talking about smart meters you have to remember they’re measurement devices, just like a thermometer is a measurement device for measuring your body temperature. So the important thing to think about is the data that is coming from the smart meters. So in the opt-out programs, the issue around the data is utilities need the data to better operate the electric system at the distribution level, to really look at reliability improvements and performance improvements. But customers also need the data. Customers are concerned over the data. But ultimately, opt-out programs are in the jurisdiction of the state utility commissions and their governing boards. It’s not in the decision authority of the Department of Energy.

Monica Trauzzi: So talk to me a little bit about the interaction between federal and state governments when it comes to smart grid, and is there enough information sharing happening?

Patricia Hoffman: Oh, I think there is a lot of information sharing. First of all, the Recovery Act investments that we have deployed, over $4.5 billion, has been done in partnership with the states. So the states are an active partner in our program. So as we look at our benefit information, as we’re looking at resiliency improvements and reliability improvements, we’re sharing that information directly with the states. How is that defining success? Well, if you look at New Jersey, they’re taking some of the best practices that we have developed, demonstrated across the United States, and seeing how are they going to build their utility of the future.

Monica Trauzzi: Earlier in this year an inspector general report found that DOE had mismanaged millions of dollars relating to smart grid projects. Has all that been recovered at this point and handled?

Patricia Hoffman: Yes, most of those funds have been recovered and handled. But out of the $4.5 billion, the IG report only identified approximately $12 million out of that. So it was a relative small investment. And we went back and did the due diligence that was required, and looking at that investment and getting the recovery where it was necessary.

Monica Trauzzi: So there are many utilities that benefited from the federal dollars that this program doled out. How about the rest of the industry? How do they benefit from the money that they maybe haven’t received directly?

Patricia Hoffman: So it’s, it’s important, because we’d like to be able to touch as many utility in the United States as possible. There are over 3,500 different utilities in the United States, but our program really only touched a small fraction of those utilities. We had 99 investment grant projects only in the demonstration side of things. But what our goals was, was to really catalyze investments. So to find what the best practices were and to be able to catalyze those investments. So some of the best practices have been clearly defined as improved outage management systems, peak load reduction on the system, deferring of power generation, voltage and frequency control, as well as other technologies.

Monica Trauzzi: So you think there’s a clear incentive for other utilities to make their own investments similar to the ones that were made under this program?

Patricia Hoffman: Absolutely, there is a very clear incentive for other utilities to make those investments.

Monica Trauzzi: So what are the next steps? Are there efforts underway to expand the grid modernization program beyond what was under the [stimulus] funding?

Patricia Hoffman: Yes, there are next steps, because ultimately our goal is to build a platform for the future. So we’ve just only began with the information platform required for communications. Where we want to go is to be able to have an active distribution system, to be able to engage further, demand response or customer participation, but allow for onsite generation, and allow for predictive capability so we can get ahead of the game. For example, monitoring of transformers, which is a critical component on the system. We want to be able to take them out of service before they get to a point that they’re going to fail. So a lot of opportunities, more investment that’s going to be required, especially in the area of storage technologies, but we’re looking forward to continuing to provide that investment.

Monica Trauzzi: A lot for the new Energy secretary to handle for sure.

Patricia Hoffman: Yes.

Monica Trauzzi: Thank you for coming on the show.

Patricia Hoffman: Thank you very much, Monica.

Monica Trauzzi: And thanks for watching. We’ll see you back here tomorrow.