the use of power electronics (FACTS, custom power technologies), which benefits wider areas than just where they are installed. Thus a major challenge for the PUCs, which play an essential role in regulating the rates and services of the utilities, is to translate policy-level performance criteria into the metrics they need to analyze the overall economics and determine the merits of modernizing the T&D system (Centolella, 2008). For example, PUCs could look for methods to establish accountability for transmission availability, to measure and internalize the value of lost load and power quality, and to measure and appropriately reward utilities for contributions to efficiency improvement and market transformation.

With such a vision in place, modern technologies could be seamlessly deployed across regions. For example, they would be incorporated whenever new facilities were built, while control centers could be gradually modernized. Communications and control software, as well as tools for improved decision support, could then begin to be implemented.

In contrast, the modernization of distribution systems can occur on a regional level, and programs are emerging in the United States as well as around the world. Pilot projects involving smart meters have begun in many areas. For example, American Electric Power (AEP) is designing an advanced meter infrastructure network involving two-way communications with system-control devices and remote connect/disconnect, time-of-use, and demand-management capabilities. AEP expects to have all 5 million of its customers on this system by 2015 (Bjelovuk, 2008). Other countries that have already implemented partial distribution-system modernization programs report very positive results. For example, Italy’s ENEL Telegestore Project is the largest metering program in the world, with over 27 million meters networked. Smart meters can come with a wide range of capabilities, and it will be important to determine what is needed to achieve specific goals and how they will be integrated into a utility’s system.

The committee judges that a T&D system can be modernized within a 20- to 30-year timeframe, assuming that the resources and a strategy for the modernization are in place. As discussed previously in this chapter, modernizing and expanding the T&D system will require a comprehensive national vision and investment; however, the investment needed is not much greater than the amount that industry has already proposed to be invested in T&D systems. The key components of the modern grid (FACTS devices, custom power, HVDC and HVAC technologies, and storage) have largely been developed, as noted earlier, and measurement, communications, and control technologies to manage these components will be deployable on a large scale, along with the associated decision-support tools, before

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