THE VALUE OF A NEGAWATT:

What would the electrical grid look like if everyone could get paid to save energy? Jon Wellinghoff, chair of the Federal Energy Regulatory Commission, the U.S. agency that regulates electricity transmission, thinks that's the future. [...]

TR: How is the smart grid changing the electric utility business?

Wellinghoff: Utilities are going to have to change or die. Traditionally, their business model has been vertically integrated; they generate, distribute, and sell energy. Now, you're seeing opportunities for utility customers--commercial building owners, the Walmarts and Safeways of the world--to fully participate in energy markets and go head to head with utilities. Ultimately, you'll have companies helping homeowners install technologies to facilitate their participation. Because of this competition, utilities will have to determine how they are going to continue to make a profit.

A number of large utilities are starting to understand that. Still, there are wide swaths of the country where we don't have these markets at all. Customers in those areas are going to have to demand them.

Does a negawatt have a tangible value?

It absolutely is tangible. We issued an order to say that a negawatt--or reducing a kilowatt of energy demand--is equal to ramping up a kilowatt of energy production. Someone who creates a negawatt should be paid for it. My mission personally has been to integrate negawatts into the wholesale energy market. If we can give the right market signals, entrepreneurs will develop ways to save energy in response to the grid's needs.

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