First, we will need a new power superhighway

Whether the goal is decreasing U.S. dependence on imported oil or reducing greenhouse gas emissions, it can’t be fully realized until the nation’s cobbled-together, decades-old electric grid gets a major makeover that will, to a large extent, determine how Americans live in the 21st century.

Most of the focus so far has been on renewable energy and so-called “smart grid” technology that allows consumers to reduce their demand by monitoring how much electricity they use. Boulder, Colo., is the first fully functioning smart-grid city in the world, with automated substations that reroute electricity around bottlenecks, identify power outages as soon as they happen, flag faulty equipment so it can be fixed or replaced before it conks out and read 16,000 smart grid meters from remote locations.

With $4.5 billion in stimulus funds and another $144 million for state public utility commissions and work force training, smart grid proponents are pushing hard for similar upgrades elsewhere. A report by the National Institute of Standards and Technology predicts that utilities nationwide will invest $40 billion to $50 billion in smart meters within the next five years. Lexington Institute senior fellow Rebecca Grant says that smart grid technology can prevent blackouts and pave the way for increased use of wind and solar energy.

There’s a catch, though. The lower bills consumers have been promised will likely not materialize — even if they’re using less electricity — because most state utility regulations allow power companies to make more money only by selling more electricity. Smart grid technology is designed to reduce consumption, so it will also reduce profits.

Utilities will point to their smart grid improvements to convince government regulators to let them raise rates. Consumers will wind up paying the same amount — or more — for less electricity.

GE Energy Vice President Bog Gilligan recently admitted as much when he noted that “decreasing energy sales would cut into utility profits. Ultimately, policy will be needed to encourage and reward utilities for driving efficiency and conservation.”

Without a significant increase in the amount of power generated to match increasing demand, electricity bills will continue to go up, leaving less money for individuals and businesses to save and invest in economy-building enterprises.

In order to tap renewable — but unreliable — power sources such as wind and solar and lower energy prices, the nation’s antiquated high-voltage transmission lines must be replaced. Without a next-generation transmission system, much of the additional power generated by wind and solar farms won’t make it to distant suburban homes and city offices.

Manhattan Institute senior fellow Peter Huber says electricity production can be increased by 50 percent if the U.S. builds a new high-voltage overlay — a supergrid — over its existing 157,000 miles of transmission lines.

That would cover projected demand, which is expected to increase 40 percent by 2040 — the equivalent of 357 coal-burning power plants — with enough excess capacity to start electrifying our transportation and home-heating sectors.

In his 2008 study, “The Million Volt Answer to Oil,” Huber estimates the overlay would cost about $75 billion — less than the $79 billion in productivity that’s already lost annually due to grid failures — and would move large quantities of power across long distances at less than a penny per kilowatt hour. It would also allow electricity generated on wind farms in North Dakota and solar facilities in Arizona to be efficiently transmitted to energy-slurping skyscrapers in Chicago and New York.

The old grid is owned piecemeal by hundreds of local entities, each governed by different state regulations, and few have the resources to finance a new superhighway for electrons. Tax credits could allow these co-ops and utilities to self-finance the upgrade.

Or — instead of squandering the remaining stimulus money on more bicycle lockers, walking trails, skate parks and other pork — Congress could invest in something that would actually stimulate the economy, create permanent new jobs, increase our national security, reduce consumers’ electric bills and encourage the development of alternative energy sources all at the same time.

It’s not often that a solution to a vexing national problem can be enthusiastically supported by such disparate constituencies.

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