Consumers Energy's application for a $174 million federal grant to support development of its smart grid project and reduce costs for customers has cleared the first hurdle with the U.S. Department of Energy.

The Energy Department has $3.4 billion of funding available in the Smart Grid Investment Grant Program as part of the American Recovery and Reinvestment Act of 2009. Consumers Energy's application advanced through the initial screening and is being reviewed by the department.

The company's application has received strong support from the state's congressional delegation, Gov. Jennifer Granholm, state lawmakers, the Michigan Public Service Commission and a number of local communities, including Grand Rapids and Jackson.

"This grant is important to Michigan because it will help create jobs and support the development and deployment of cutting edge technology in our state's energy infrastructure," said U.S. Sen. Debbie Stabenow. "Along with creating jobs, this technology will help keep Michigan competitive and ready for an economic recovery."

Stabenow and U.S. Rep. Mark Schauer visited Jackson today to tour Consumers Energy's Smart Services Learning Center, a full-size demonstration unit that shows how the smart grid technology will improve service and convenience for customers and help them save energy and save money.

"This new technology is very impressive. As we reshape our national energy policy, technology like this will be a key part of our new approach to using energy. With technology like this, we all will use less energy, which not only will save us money, but it also will provide some important environmental benefits," Stabenow said.

Schauer said the Consumers Energy project had strong support in Washington and in Michigan because of the benefits it will bring to customers.

"This smart grid technology will give customers new choices and detailed information that will help them save energy and save money. A key goal of the American Recovery and Reinvestment Act was to encourage the development and deployment of new technology to help us use energy more efficiently. That's exactly what this project will do and why I and so many others at both the state and federal level have urged the Department of Energy to support it," Schauer said.

Schauer added that he is optimistic, even though there is stiff competition for the grants with utilities across the country submitting hundreds of applications.

Consumers Energy plans to invest about $900 million through 2015 in its smart grid program. A federal grant would reduce the amount that the company would seek to recover from customers for the project.

The new "smart grid" meters will provide Consumers Energy's 1.8 million electric customers with detailed information about their power usage, allowing them to make decisions about energy efficiency, conserving electricity during periods of high demand, and lowering their energy costs.

Consumers Energy also plans to add communication modules to the existing meters for its 1.7 million natural gas customers. That will allow the utility to provide more detailed information about energy usage to those customers, so they can make decisions about lowering their natural gas costs with energy efficiency steps.

The smart grid project is part of Consumers Energy's Growing Forward strategy, which calls for investing more than $6 billion in its utility operations over the next five years. Those investments will improve service to customers plus create jobs, boost the state's economy, and expand the state's tax base.