The drastic reduction of carbon emission to combat global climate change cannot be realized without a significant contribution from the electricity sector. Renewable energy resources must take a bigger share in the generation mix, effective demand response must be widely implemented, and high-capacity energy storage systems must be developed. A smart grid is necessary to manage and control the increasingly complex future grid. Certain smart grid elements-renewables, storage, microgrid, consumer choice, and smart appliances-increase uncertainty in both supply and demand of electric power. Other smart gird elements-sensors, smart meters, demand response, and communications-provide more accurate information about the power system and more refined means of control. Simply building hardware for renewable generators and the smart grid, but still using the same operating paradigm of the grid, will not realize the full potential for overall system efficiency and carbon reduction. In this paper, a new operating paradigm, called risk-limiting dispatch, is proposed. It treats generation as a heterogeneous commodity of intermittent or stochastic power and uses information and control to design hedging techniques to manage the risk of uncertainty.