Two interesting articles, both emphasizing the importance of consumers in the smart meter/smart grid manifesto being championed these days. The first wisely notes that smart meters are just a tool – they don’t save energy; people save energy. As the report notes, smart meters provide “…a tool that helps us to at least manage our electricity bill and help offset electricity rate increases. We can do this by shifting our behaviour—using less electricity during higher-cost peak periods and more during lower-cost off-peak periods. Even better, by using less overall.” We would prefer smart markets to exist to motivate even more dramatic voluntary consumer behavior, but we applaud this report’s focus on consumers:
“…Do we as a society have what it takes to make, let alone lead, major infrastructure transitions that aren’t expected to bear fruit for many years?
I asked this question of Michael Martin, a technology consultant in the energy and utilities group at IBM Global Business Services. Martin is a smart guy who keeps a close eye on major trends around the world.
His answer – “Yes!” – surprised me somewhat, given the public’s distaste these days for any megaprojects that hit them in the wallet. To back up his answer, he pointed to the Ontario government’s decision a few years ago to deploy smart meters across the province and introduce time-of-use pricing.
“Right now, Ontario is a world leader in the smart grid and smart meter systems,” he explained. “Dozens of utilities around the world are watching what’s going on here. In a way, we have become a micro lab for the rest of the world.”
Of course, here at ground zero you wouldn’t know it. There’s no sense of pride for taking the lead and having vision. The mere mention of “smart meter” seems to raise the hackles of Ontario electricity consumers who feel they have been “victimized” by time-of-use pricing.
One year has passed. The first bills have come in. They’ve had enough with the injustice of it all.
A similar backlash is being felt in a number of other jurisdictions that have followed Ontario’s lead, most notably in California. People are realizing that this high-tech device doesn’t actually save you money.
That’s because smart meters are just a tool. Smart meters don’t save energy; people save energy. Without smart meters electricity prices would still be going up. We simply can’t dodge that bullet. Our aging and neglected electricity system needs an overhaul and a cleanup.
Fighting this infrastructure deficit will be costly because all new generation has a higher price tag than in the 1970s and 80s, especially if we want to get out of the smog and greenhouse-gas production business.
With smart meters, however, we have a tool that helps us to at least manage our electricity bill and help offset electricity rate increases. We can do this by shifting our behaviour—using less electricity during higher-cost peak periods and more during lower-cost off-peak periods. Even better, by using less overall.
The benefits of smart meters over the long term will become clearer. Utilities will be able to monitor their networks better and respond more quickly to outages. They’ll be able to design new services that are customized to your electricity consumption patterns.
Electric vehicles and smart appliances will be able to interact with an increasingly smarter grid. Without laying the smart meter foundation, none of this is going to happen.
Let’s be patient. We’ve only been at it for a year. Customers are still getting used to the change. It didn’t help that we just came off the second-warmest summer on record, which drove up electricity bills alongside the introduction of the HST. The timing, in a word, sucked.
This is all new for utilities, too. They’re still trying to work out the bugs, and the government is still trying to find the right balance with respect to peak and off-peak pricing, as well as develop support programs for seniors and those on fixed incomes who have a more difficult time adjusting.
In hindsight, utilities and government should have done a better job of explaining why smart meters, and a move to the smart grid in general, will serve us better in the long run. They also erred by playing up the devices as some sort of money-saving miracle machine.
Personally, I would have just positioned smart meters as just another boring upgrade to an aging system. As the phone and cable companies have learned, you don’t promote the device, you promote the capabilities and services the device enables down the road.
Not having these devices is akin to not having the cable modems and wireless routers that give us fast and wireless access to the Internet, or sticking with basic analog cell phone service and never going digital.
If we care about progress, these are investments that need to take place.
The second examines Peak Time Rebates (PTR) that will enable consumers to decide for themselves about use or conservation. As the article notes:
“…Today’s radical concept is that energy consumers should have the right to decide for themselves whether they would rather save money by shifting some load off-peak, or pay more and not worry about when they use energy…
Smart meters, when coupled with the required software platform and applications, enable this through providing consumers with better information about their energy usage and choices for dynamic pricing.
What’s the small step in making this radical concept of dynamic pricing a reality? Peak Time Rebates (PTR)
PTR is a no-risk proposition for consumers. They stay on their current electric rates. But they also have a new opportunity: to earn rebates by reducing peak load on critical peak days during the afternoon.
Energy users who favor comfort simply ignore the price signal and pay their normal bill. Those who wish to can respond to the signal, save money on their bills, and help the environment.
The rebates are funded by reduced power purchase costs in the wholesale market. On average, customers cut peak load by around 15%.
Oddly enough, all consumers win. Those who shift peak load get direct rebates. Those who ignore the signal pay no more — and, over time, they actually pay less, since wholesale prices are reduced by those customers who do respond to the price signal. (This is well documented.)
PTR is a no-lose approach, so the California Public Utilities Commission adopted it for Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric residential consumers. It will go into effect in 2012 when most of the smart meters will be in place. Also, Baltimore Gas & Electric (BGE) and Potomac Electric Power Co. have proposed it for residential consumers in Delaware, Maryland, and the District of Columbia.
PTR has its imperfections, as did the Magna Carta — but it is an enormous step in the right direction and creates substantial benefits. In BGE’s business case, total benefits from dynamic pricing are forecast at $2.0 billion. Most of this is from PTR.”
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