The U.S. Department of Energy has awarded $75 million to a Columbus utility for a project to install and demonstrate “smart grid” technology that could make the electricity distribution system more efficient, help customers reduce their power bills, and speed emergency responses to power failures.

The Energy Department turned down Dayton Power and Light Co.’s request for $145 million in funding for DP&L’s planned smart-grid project.

The funding for AEP Ohio, an American Electric Power subsidiary, is part of $620 million in economic stimulus funding the government is distributing nationally for competitive proposals involving 32 demonstration projects.

The Columbus project will affect almost half of Ohio and take more than three years, involving more than 100,000 customers within the AEP service area, the Energy Department said. The project is to include improved distribution system and control equipment, and “smart” meters and appliances that are designed to help customers reduce energy costs by offering pricing depending on what time of day electricity is used.

The so-called smart meters — supported by computer software and hardware — can also help a utility more quickly identify which customers have lost power in an outage, speeding maintenance responses.

DP&L has asked the Public Utilities Commission of Ohio to allow the Dayton utility to proceed with modernizing its distribution system and installing advanced meters, which could take 10 years and cost more than $500 million. DP&L also is asking PUCO’s permission to recoup those costs from customers.

DP&L said the federal funding could have offset costs of the program’s three-year, initial phase, which is to begin in 2010. It will involve installing 523,000 new meters for all customers throughout the company’s 24-county service territory.

The PUCO hasn’t ruled. It has extended the period for public comment on DP&L’s proposal through the end of December.

Contact this reporter at (937) 225-2242 or jnolan@DaytonDailyNews.com.