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Will Consumers Get Smart with Smart Meters?

RP Siegel | Tuesday February 2nd, 2010 | 2 Comments

Smart metering, a key element of the so-called Smart Grid, has been touted as a great bright hope that will enable residential electric customers to cut their usage, thereby reducing greenhouse gases as well as their monthly bills. By providing immediate feedback to customers as to how much power they are using, what their annual bill is projected to be and how their usage compares to that of their neighbors, it is hoped that the meters will motivate ratepayers to adjust their behavior and their electronics so as to reduce overall load on the system.

“In a sense, this program is a kind of keeping up with the Joneses strategy for energy efficiency,” says Anne Pramaggiore, president and COO of Commonwealth Edison who just completed a pilot program in which 50,000 customers were given monthly online feedback. The program, which the Illinois company plans to expand, led to a 2 percent reduction in energy use.

But others are skeptical that simply providing more information will result in customers making different choices and reducing their demand for electrons.  Ted Schultz, vice president of marketing and energy efficiency for Duke Energy, told the Chicago Tribune that the so-called “smart grid” approach has been lauded as a way to give consumers more freedom and control over their energy use, but in Ohio, where the devices are being tested incrementally, customers aren’t looking to micro-manage their energy consumption. They want to see their bill, but that’s about it.

Monica Martinez, commissioner of the Michigan Public Service Commission, said, “When I ask the question, ‘Do you know how many kilowatt hours you use per month?’ Nobody knows.”

Meanwhile, in California, after the installation of smart meters, Bakersfield residents filed a class action lawsuit, charging that their bills have gone up sharply ever since the meters were introduced.  PG&E officials claim that the higher bills are due to a combination of rate hikes, an unusually warm summer, and customers not shifting demand to off-peak times when rates are lower.

This last point is another key aspect of the smart meter program. The designers are hoping that the use of these meters will help shift demand away from peak periods through pricing incentives. The idea is that the meter will provide guidance as to what time would be most economical for discretionary usages, such as when to run the dishwasher or the dryer. This, in turn, will help the utility to manage its demand, cutting peaks, and reducing or possibly even eliminating the need to bring less-efficient peak plants online. If they are right about this, it could be a win-win for both utilities and consumers, though it would require a change to a Time of Use or Real Time Pricing structure.

So it seems that right now, on the question of “will the dog eat the dog food?” when it comes to smart meters, we have mostly speculation.

In the Huffington Post, David Gershon, CEO of the Empowerment Institute and a veteran of numerous energy conservation programs wrote that, “Empowering citizens to reduce their carbon footprint will not only slow the deterioration of our climate system, but also help create a carbon-literate society desirous of bold government climate policies and demand for the low carbon products and services on which much of the U.S. economic future is being built.”

In his latest book Social Change 2.0 (High Point/Chelsea Green), he writes, “people are willing to change if they have a compelling vision and are provided tools to help them bring it into being.”

Are smart meters just such tools? Illinois’ Commonwealth Edison thinks so. It expects to have them installed in nine towns serviced by the Maywood Operations Center by the end of May 2010. The meters will be provided by GE Energy with the network interface provided by Silver Spring Networks. Data management will be provided by Accenture.

The Department of Energy thinks so, too. In October it announced plans to install 2.5 million of them nationwide over the coming months.  That should provide ample opportunity to find out. Let’s hope that when it comes to energy conservation, a little knowledge goes a long way. For a visual take on the global deployments of smart meters thus far, check out this handy Google map.

So, will the new Smart Meters reduce energy consumption? The answer to that, it seems, will depend on users. The meters will be little more than high tech decorations–unless consumers take advantage of them.


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  • http://progressivetimes.wordpress.com/ T. Caine

    A good overview, RP. I am a proponent of a smart grid approach as a way to start assessing the major inefficiencies that exist within one of our largest infrastructure networks. I think one of the key elements to achieving the consumer response that we are striving for is the interface. It is one thing to have a tool that sorts data in a smart way, but how that data is accessed real time and used is the defining factor of the results that it will produce. Via a desktop program or an LCD read out on the wall in the kitchen, American consumers need that interactive nature to engage the system. This is crucial.

    I also think that a smart grid needs customers to evolve into a new generation of products in order to really get the full bang for the buck. Appliances with logic software that can talk to the grid only elevates the level of data that can be used. Electric or plug-in hybrid vehicles can represent large changes in lifestyle cashflow (away from gas). Charging at night for low peak rates will show up on the radar screen of more people when there are larger options to save.

    I say move ahead. There are bugs and setbacks in every new system, but this is a step forward.

  • http://progressivetimes.wordpress.com/ T. Caine

    A good overview, RP. I am a proponent of a smart grid approach as a way to start assessing the major inefficiencies that exist within one of our largest infrastructure networks. I think one of the key elements to achieving the consumer response that we are striving for is the interface. It is one thing to have a tool that sorts data in a smart way, but how that data is accessed real time and used is the defining factor of the results that it will produce. Via a desktop program or an LCD read out on the wall in the kitchen, American consumers need that interactive nature to engage the system. This is crucial.

    I also think that a smart grid needs customers to evolve into a new generation of products in order to really get the full bang for the buck. Appliances with logic software that can talk to the grid only elevates the level of data that can be used. Electric or plug-in hybrid vehicles can represent large changes in lifestyle cashflow (away from gas). Charging at night for low peak rates will show up on the radar screen of more people when there are larger options to save.

    I say move ahead. There are bugs and setbacks in every new system, but this is a step forward.

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