A Wall Street Journal article written by Rebecca Smith, entitled “What Utilities Have Learned From Smart-Meter Tests…”, explores the opportunities that smart meters are missing out on.
Smith says that because smart meters send readings on electricity usage to utilities throughout the day, they make it possible for utilities to charge more for power when demand is highest (in the afternoon) and less when usage falls off (at night). But, according to Smith, utilities are hesitant to charge customers for extra energy use. They fear that if customers associate smart meters with higher bills, this will have a negative effect on how the technology is perceived.
Smart meters are expected to represent 1/3 of US electric meters in the next 5 years.
By making variable pricing plans possible, smart meters are expected to play a big role in getting customers to reduce their peak-hour energy consumption, a key goal of utility executives and policy makers. Electricity grids are sized to meet the maximum electricity need, so a drop in peak demand would let utilities operate with fewer expensive power plants, meaning they could provide electricity at a lower cost and with less pollution.
Utilities have run dozens of pilot tests of digital meters and found that people cut power consumption the most when faced with higher peak-hour rates. But utility executives and regulators have been reluctant to implement rate plans that penalize people for too much energy use, fearing that if customers associate smart meters with higher bills, they will stall the technology’s advance just as it is gaining traction.
…So, many utilities are trying an approach that is less controversial, but also less effective: offering rebates to customers who conserve energy in key periods of the day.
The article continues on to say that utilities are also finding that commercial customers are unable to cut their power usage. Last summer, Connecticut Light & Power Co., a subsidiary of Northeast Utilities Service Co., gave new meters to 3,000 residential and business customers. Commercial customers, faced with peak-hour pricing, cut their demand 7%—far last than residential customers who cut their peak use by 16-23%.
Jessica Brahaney Cain, director of CL&P’s smart-grid planning, said that this shows that many commercial customers don’t have the option of cutting usage during times of peak demand. “A restaurant has to use its ovens,” she says. “A dentist has to use his drills.”
How effective are smart meters if utilities don’t take advantage of the opportunities that they present? Should commercial facilities be charged more for energy during peak hours? If not, what other options are available?