Buzzword: Smart Grid

What it means. Grid is a basic term when it comes to providing electricity to end users, be they homeowners, schools, factories, hospitals, or office buildings. It refers to the infrastructure that delivers electricity from the point of generation to the consumer. Grids consist of a transmission system, which moves electricity from power plants to substations, and a distribution system, which sends it along to the users.

A smart grid uses the same basic infrastructure but overlays it with modern technology. Smart grids are supposed to offer several advantages over traditional versions. They are self-monitoring, meaning they can identify overloads in the system and prevent blackouts; are more secure against human attacks and natural disasters; give users real-time information about their consumption, paving the way for variable pricing, smart appliances, and more efficient usage (leading, in turn, to lower utility bills); and are compatible with sources of green power.

Why the buzz? The gains of smart-grid technology are many, but until recently they've also been mostly theoretical—even after Title XIII of the Energy Independence and Security Act of 2007 called for the construction of a 21st-century electric system. But earlier this year, Xcel Energy announced that it had tapped Boulder, Colorado, to be the first Smart Grid city in this country. Besides being manageable in size, the 100,000-person city sits near several key research institutes and is home to what one Xcel rep termed early adopters, folks who aren't afraid to try something new. (Would that make them alpha geeks?) The announcement was big news for Boulder.

"We're very excited to be a partner," said Jonathan Koehn, the city's environmental-affairs manager. "It promises to be a great demonstration of what smart grids can do to benefit consumers and utility companies."

The project will unfold in phases over the next few years. Two substations have been upgraded with smart technology, and by the end of the year, 15,000 Boulderites will be equipped with smart meters that allow them to monitor their power usage online. The meters are free to anyone who opts into the program, with Xcel and its SmartGridCity partners picking up the tab.

As smart grids spread throughout the country, figuring out who should pay for the smart meters has become a source of debate. Frederick Butler, commissioner of the New Jersey Board of Public Utilities and cochair of the National Association of Regulatory Utility Commissioners-Federal Energy Regulatory Commission Smart Grid Collaborative, puts the cost of a meter at $100 to $200, though that price is expected to fall as the technology matures. "It's a work in progress," says Butler. "The smart grid really has potential, so we want to deploy it in a way that doesn't turn people off, but rather gets them excited."

Central to the discussion is determining who benefits from smart grids: utility companies or customers. "Once we fully identify the benefits, we can assign an appropriate cost allocation," says Butler. Any costs covered by consumers will likely be in the form of a surcharge on their bills for a year or two. But not in Boulder, where early adoption has its perks.—Daniel DiClerico

Essential information: Read more about smart meters and check out our Energy-Saving Guide for tips on cutting energy use at home.