About 4,600 residential and small business transformers in the university city of about 100,000 are tied to the system.
"We've essentially tied all the background pieces together," Xcel Energy spokesman Tom Henley said.
The idea behind a smart electrical grid is to develop a digital, flexible system that provides better flow and use of electricity. Some of the anticipated benefits are lower carbon emissions, coordinating energy use with the availability of power sources such as wind and solar, and savings by avoiding power disruptions.
The company hopes to be able to distribute electricity when and where it's needed, saving millions of dollars and the need for new power plants.
Other companies and communities across the country are installing smart meters and forming partnerships to modernize the electric grid, which has changed little over the last century. The project in Boulder, however, is thought to be the furthest along, said Ed Legge, spokesman for the Edison Electric Institute, a national trade association of shareholder-owned electric companies.
Xcel Energy, working with a consortium of other companies, started work in May 2008. The other companies include Accenture, Current Group, GridPoint, OSIsoft, Schweitzer Engineering Laboratories, SmartSynch and Ventyx.
The utility said the system has already helped it avert four potential long-term outages by getting warnings that transformers were ready to fail.
Henley said the next steps include giving customers with smart meters Internet access to monitor and personalize their energy use. Xcel Energy has at least another 9,000 smart meters ready to be installed for interested customers.
Xcel Energy and its partners have worked with the University of Colorado in Boulder. The university chancellor's residence was turned into a showcase for the effort. Former Chancellor G.P. "Bud" Peterson and his wife, Val, used a laptop computer to set their thermostats and check their energy use. They drove a plug-in electric hybrid SUV provided by Xcel Energy.
The vehicle draws energy from the grid and feeds energy back. The utility is working on converting more vehicles for Boulder County to use.
Henley said several companies and government organizations, many from other countries, have toured Boulder to learn about the project.