Is this dumb or what? The smart grid technology that was supposed to be the future of energy efficiency is in danger of being unceremoniously swept up and deposited in the dustbin of history.

Lighting up the future
The Smart Grid was going to revolutionize our energy usage, and President Obama and Congress even committed to spending $4.5 billion in stimulus funding on smart grid deployments. Instead of just being a dumb pipe that transmitted electricity into our homes, the technology was going to create a two-way communication system enabling utilities and grid operators to better manage and monitor the flow of electricity usage and channel it to where it's most needed. At the same time, consumers would be able to take matters into their own hands -- through smart meters or appliances and electronic devices that can communicate with the grid -- to save money and make better energy decisions.

Utilities from Duke Energy (NYSE: DUK) to Exelon (NYSE: EXC) were going to drive advances in upgrading the grid, setting ambitious goals to roll out to their customers millions of smart meters. Southern (NYSE: SO) was also developing "smart substations" to remotely monitor lines, isolate trouble spots, and protect against failure.

Priced out of the market
Funny how a lot of high-falutin' ideas ran into the brick wall of reality and resistance. Not surprisingly, it turns out that regulators aren't electrified by free market principles. Simple supply and demand concepts like real-time market pricing caught a chill faster than leaving a window open on a cold winter's day -- seems regulators were hesitant to allow prices to rise during peak periods and fall during slow times.

Maryland's utility commissioners defeated a proposal by Constellation Energy's (NYSE: CEG) subsidiary Baltimore Gas & Electric to deploy smart meters throughout the state, effectively ending any hope of implementing the smart grid technology there. "We actually do not see any clear path to move forward," said BG&E's senior VP for strategy and regulatory affairs.

In the dark
Of course, utilities occasionally haven't done themselves any favors. One smart meter customer of California utility PG&E (NYSE: PCG) reportedly sat through a six-hour blackout only to find out when the power was restored that his energy consumption had somehow tripled. Turns out, with no data being sent to the utility, the system makes a best guess attempt at what usage was based on prior history or similar residences. That PG&E knew about the glitch but chose to do nothing about it because it didn't result in higher bills, undermines customer confidence in the system. The utility is also facing lawsuits over its meters.

Duke had to scale back it ambitious plans, too. In Indiana, its plan to deploy 800,000 meters over a six year period has been reduced to just 40,000 over the next year because regulators can't see enough benefits for consumers right now.

Cool! Oh wait, what?
It looked like a smart idea on paper, and even tech giants like Google (Nasdaq: GOOG) and Cisco (Nasdaq: CSCO) invested heavily in the grid. Yet as much as it's way cool to see your energy consumption displayed in colorful bars and graphs, the "gee whiz factor" dissipates pretty quickly. Consumers need to see some tangible benefit before they'll be willing to adopt it, but without regulatory acceptance of integral components like real-time pricing, there won't be anything to show for it.

That's just dumb
Utilities might end up going from being the biggest investment opportunity to becoming a sinkhole of waste, a Maginot Line to energy efficiency. In short, it's not so much the Smart Grid that's dumb -- handing over the power to manage its implementation to political appointees doesn't seem so smart.