Smart grid advocates and lawmakers were (as expected) shot down this week when the Illinois governor, Pat Quinn, followed through with the promise to veto legislation that would raise electricity rates to help modernize the grid.

The bill will now go back to the legislature, where proponents say that the veto will be overridden. But Quinn wants the process to start again from the beginning, not at the hands of politicians, but under the purview of the Illinois Commerce Commission. The current bill would provide ComEd and Ameren with $3 billion for infrastructure over the next 10 years.

Nowhere near Illinois, in an over-air-conditioned, brightly carpeted conference room in the nation’s capitol, smart grid industry leaders mulled this decision during GridWeek on Wednesday.

“Stakeholders believe they have a compelling business case for smart grid, yet the governor vetoes that,” said David Green, Executive VP of Customers & Markets for Elster. “There are real questions around the business case: are the benefits to customers real?”

Ask anyone at GridWeek 2011 (or any year at GridWeek) and they tell you the benefits are very real: more reliable service, with fewer, more isolated outages and better power quality. More control in the home around heating and cooling (although arguably this does not require a smart meter) and a wealth of visibility options to allow customers to understand their energy use, if they choose to.

But there is no elevator pitch in smart grid, at least not one that’s loud and clear enough to reach enough politicians and other stakeholders. There’s a vague, yet noisy, refrain in politics that the U.S. needs to invest in infrastructure -- but few real ideas about timeline and cost.

“Every comment made by the Attorney General in Illinois agrees that we need to build the smart grid,” said Eric Dresselhuys, Executive Vice President & Chief Marketing Officer Silver Spring Networks. “That’s where the agreement stops. This is about procedural mechanism. All of the comments from people who fought ComEd agree we need a smart grid, but no one can say how to build it.”

Opponents, although they support the notion of a more intelligent grid, said the bill didn’t have enough consumer protections and would unfairly raise rates. The governor also attacked ComEd for how it handled its recent power outages.

In many ways, Dresselhuys is correct. This is a procedural issue in that it pertains to how the utilities go about the process of cost recovery, and it could be worked out either in the next round of legislation or, eventually, back in the hands of the regulators.

And yet it’s so much more than that. A grid with more visibility -- from the transmission down to meters on the house -- would be a huge asset in an outage and ideally would allow ComEd to better manage -- and to minimize -- outages.

For all of the talk about the sad state of American infrastructure, there is a lack of political will to invest in utilities in many regions, and a lack of innovation by some utilities and regulators when it comes to designing a system that will allow utilities to provide 21st century service.

Another advantage of a modern grid is that large businesses set up shop in cities and towns based on power reliability -- something that municipal utilities often use as a factor in adopting smart grid technologies.

For consumers, it’s all about “simplicity and value,” according to Brian Huey, Strategy and Business Development for M2M Smart Grid, Utilities, Oil and Gas at Sprint Nextel. “Then you have to address the ‘what’s in it for me.’” It sounds so simple, and yet Illinois shows that it’s so hard.

Part of the problem is that utilities have historically never had to sell ideas to their customers -- and many vendors in the space will regale you with stories about how frustrating some utilities are to work with in this regard. It’s a slow learning curve for many. Also, some technologies, like smart meters, might not make sense for every utility right now unless they can demonstrate they’ll be used to meet demand-side efficiency through robust consumer programs.

The sales pitch for smart grid has to come faster, clearer and in more ways than ever before if it's going to get built nationwide anytime soon. And there are a lot of selling points; they get repeated at conferences all year round. Few of them are put out to the public in meaningful ways, outside of a handful of TV commercials in select states.

Illinois is both an isolated and common problem. In many ways, it is reminiscent of the Baltimore Gas & Electric proposal that was denied before being re-jiggered and finally approved -- with more consumer safeguards and education.

Utilities should be pressed to prove why their requests for rate hikes are justified, but they also need a crash course in public relations -- and potentially in organization culture overall -- in order to see that a 21st-century grid starts at more reliable power but needs to be so much more. “If we decide to spend all of our time and energy obsessing about the paybacks and regulatory benefits instead of the consumer benefits,” said Dresselhuys, “we’ll never get anywhere.”

Tags: comed, cost recovery, gridweek, illinois, smart grid, smart meters