State-level control of Smart Grid decisions means we now have to take the fight to the states, to convince each and every public utility commission to allow Smart Grid expenditures. Doing that will mean having a dialog with the regulators -- and with the politicians and consumers who influence them. Utilities that up to now have been able to take a "we'll deal with it when the regulators say we have to" attitude are likely to face mounting pressure -- if not to modernize, then at least to explain why not.

Jesse Berst is an internationally known technology and business analyst, and co-author of the forthcoming book Electronomics. He is the founding Editor of Smart Grid News.

I was in DC in February 2009 to do my part in making the case that all 50 of our states need and deserve a Smart Grid. I briefed many of the nation's governors and their staffers about the Smart Grid's potential and importance. I made these three points:

• It's the best, most responsible way to spend stimulus money
• There are several pots of money to draw from
• It can be done in a phased manner that pays for itself as it goes along

The best way to spend stimulus money

You'll be hearing lots about "fiscal responsibility" over the next months. The Smart Grid is perhaps the most fiscally responsible of all stimulus investments because it has a 5x multiplier:

1. Short-term jobs installing and equipping
2. Long-term green collar jobs in the next big industry (exportable Smart Grid products/services)
3. Long-term competitive advantage to all other industries through cheaper, cleaner electricity
4. Major environmental and climate benefits
5. Major national security benefits

There are many pots of Smart Grid money

The stimulus bill has $4.6B specifically labeled Smart Grid, but there are many other pots of money with more generic labels that could be applied in part to the Smart Grid as well. Examples include the set asides for transmission, energy efficiency, electric vehicle infrastructure, and several others.

The four (make that five) pillars of the Smart Grid

I suggested to the governors that they take a step-by-step approach to the Smart Grid, one that can pay for itself along the way. In my prepared remarks, I suggested four pillars. After hearing California Governor Arnold Schwarzenegger talk about the importance of communicating the value of infrastructure, I added a fifth. As he put it, "we need to find a sexier word for infrastructure, because it is too important to be ignored the way it is now."

1. Planning. Every state should have a Smart Grid roadmap. West Virginia is leading the way. All other states should follow... and, ideally, should collaborate regionally to minimize the cost while maximizing the interoperability.
2. Principles. Insist on open standards and protocols to ensure interoperability.
3. Pricing. Make sure the system collects and transmit time-of-use and locational pricing. Each utility commission can decide for itself what to do with that information. But even if a given state doesn't want to have time-of-use pricing, the utilities need that value information to correctly allocate their resources and consumers have the right to know what, when and where they are spending on electricity.
4. Policy. Regulations must be changed to reward utilities for selling less electricity.
5. Promote. As Governor Schwarzenegger emphasized, we must communicate the importance of upgrading the infrastructure to the stakeholders, and then we must give them regular progress reports.

Please use the comment form below. Tell me whether I got it right. And tell me what you think the utility commissioners in your state really need to hear.