Duke Energy has reached a settlement agreement with the Indiana Office of Utility Consumer Counselor and key consumer groups on a proposal to begin modernizing its electric grid to create an intelligent power delivery system.

The initiative - called "smart grid" -- would employ advanced digital technology to save energy, improve the reliability of the power delivery system, improve customer service and reduce the impact on the environment.

The settlement was reached between Duke Energy, the Indiana Office of Utility Consumer Counselor, the Duke Energy Indiana Industrial Group, Nucor Steel, and the Citizens Action Coalition of Indiana Inc.

"The existing power grid is an engineering marvel, but its design is more than a century old. It's an analog-based system designed to deliver power with little communication between the utility, the power grid, the meters and our customers," said Jim Stanley, president of Duke Energy Indiana. "Smart grid, with its digital, two-way communication capabilities, will transform how we operate our system - improving customer service, power reliability, and the efficiency of our transmission and distribution system."

Benefits of a smarter energy grid include:

  • The ability to provide customers with more detailed information regarding their electricity usage and more information for managing their bills. Today, customers receive only their total usage for the month. With smart grid, customers will be able to know their usage daily. As smarter appliances become available, combined with home energy management systems, customers will be able to control their level of comfort, convenience, cost and environmental footprint.
  • The digital gateway necessary to eventually offer customers a variety of sophisticated cost-saving energy efficiency programs. For example, customers could eventually monitor and manage their real-time energy usage online.
  • A state-of-the-art communications system along thousands of miles of power lines in Indiana to help detect and prevent power line trouble before outages or other electricity delivery problems develop. Today, most utilities don't know that a customer is out of power until the customer reports the trouble.
  • New smart meters that allow two-way electronic communication between the utility and the meters, greatly reducing the expense of on-site meter reading, providing more detailed usage information, enabling service to be reconnected or transferred remotely.
  • Advanced technology to further monitor and automate Duke Energy's power delivery system, which will increase overall reliability.

If the settlement is approved by the Indiana Utility Regulatory Commission, Duke Energy will work to begin installing smarter energy meters and related equipment within six months.

The settlement provides for periodic program evaluation by all the parties and gradually ramping up meter installations. Duke Energy's goal is to install more than 800,000 smart meters throughout its 69-county service area over approximately five to six years.

In addition, the settlement agreement provides for a renewable "distributed generation" pilot, in which photovoltaic panels, wind turbines and solar thermal water heaters will be installed at a specified number of homes and small businesses. Further, the company will pilot advanced pricing options for customers, plug-in hybrid electric vehicles and residential home energy management systems. The residential home energy management system pilot would allow participating customers to manage their energy usage through an Internet portal.

"The energy future demands an intelligent power grid to handle distributed generation, plug-in hybrid electric vehicles, and provide our customers with more energy efficient options and control," said Todd Arnold, Duke Energy senior vice president of smart grid and customer systems. "When combined with our smart grid rollout already under way in Ohio, Duke Energy continues its leadership position in the transition to a smarter power grid."

Arnold also said the company will soon apply for economic stimulus funds provided through the 2009 American Recovery and Reinvestment Act to help offset the costs associated with deployment of the smart grid system. Over the five- to six-year deployment schedule, the company is expected to invest approximately $445 million.