From the point of view of my industry’s segment, metering, the
Energy Bill 2005 appeared to be ground-breaking: For the first
time ever, efficiency measurement, real time tariffs, peak tariffs
and specific time period pricing were given a prominent place in a
Federal Bill. Issues, for which National and International
metering organisations have been fighting for since the early
1990s, finally appeared to be seriously addressed.
Of course, my particular angle did not obstruct the fact that
wide ranging legislation was taking place by the only superpower
at a crucial time for the energy industry worldwide. To my
surprise however, only a few publications on this subject appeared
in EnergyPulse, or any other energy magazines to which I
subscribe.
My wonder at this low-key reception grew into astonishment,
when last month, at the VI Energy Fair in Boston, MA., an expert
panel unanimously declared when asked by the audience, that The
Bill does not deserve a serious debate. It was, one of them said,
compromise legislation with a short time horizon, much too short
to affect any momentous policy changes.
In this article I examine this assertion through the metering
issues as they appear in The Bill, and assess its possible impact.
At the end of this article I will try to project from the private
case of metering to the general thrust of The Bill.
Two parts of this bill are relevant to metering. Sections 101
to 104 concern Energy Efficiency in public buildings; and section
1252, which is entitled Smart Metering.
Section 101 imposes on the Houses of Congress and all Federal
Buildings in the USA a 20 percent reduction in energy consumption
by the year 2015. This change is not just to be ‘reported’ but
also to be measured. And not just measured in general – the
legislator actually specifies the tool: smart metering.
To be properly measured and not just ‘modelled’, (that is a
euphemism that hitherto served all institutions and meant in
effect ‘too expensive to measure’) is nothing less than a
revolution. Daily and hourly metering systems are to be installed
in all buildings before the end of 2012 - the first time, to my
knowledge that such a specific undertaking of the meter’s function
is openly stated. With it another important ‘first’: an
understanding that the cost of additional metering to the consumer
is less than the savings in terms of the efficiencies it enables.
It is in effect set to become the largest exercise in history
of real-time metering as a tool for energy efficiency management.
So far, so good. This is a promising start with a courageous
demonstration of a clear vision and bold decision making. The
legislator appreciated that ‘doing your best’ or writing long
manuals to accompany PR campaigns does not achieve great
efficiencies. This Bill announces that trying is not necessarily
achieving, and that ‘thinking of switching an appliance off’ does
not always do the job.
But more importantly, this is the first time that metering is
taken out of the hands of the utilities, its traditional
operators. It becomes at once clear that utilities’ job is to sell
as much of what they are selling, and the role of the consumer –
in this case the Government, is to buy as little of it as
possible. Whilst utilities measure the flow of energy to our
premises for billing purposes, it is our duty to measure the
efficiency of this energy and the two measurements cannot be done
together because there is an inherent conflict of interests
between them.
However, whilst on the Federal front things are crystal clear,
a bit further down the document, in Section 123, which is
concerned with general efficiency measures in individual States,
already returns to the old ways. It states:
“Each State energy conservation plan with respect to which
assistance is made available under this part […of the Energy Bill
2005] shall contain a goal, consisting of an improvement of 25
percent or more in the efficiency of use of energy in the State
concerned year 2012 as compared to calendar year 1990, and may
contain interim goals.”
In other words, not only are State Governments given the
advantage of ‘acquiring’ the progress of the past 15 years, but
any future achievements will only be ‘measured’ by a vague 25%
increase in efficiency, presumably with the aid of one model or
another. No tool is mentioned, and certainly no quantitative
methodology.
Similar approaches are demonstrated in a variety of well
meaning initiatives, from assistance to low-income groups, to
building and housing efficiency measures. The common denominator
is the absence of a clear quantitative tool to measure any
progress (or otherwise) incurred as a direct outcome of the
actions or inactions that result from the Bill. From my
perspective, the only tool capable if producing such data is
real-time metering, but the word ‘meter’ in any configuration does
not appear in this Bill again until 1,000 or so pages later.
There, in section 1252 entitled ‘Smart Metering’ lays the
strongest indication that the Bill really isn’t much more than a
delaying exercise, or a ploy to reduce public pressure.
This section looks at the three elements that should take home
metering to its most potent position, the provision of time-based
rate provision:
- Time of use pricing
- Critical peak pricing
- Real time pricing
The first relates to the ability to regulate quantities of
energy (and water) used by pricing policies. Summer prices for
example, reflect the cost of air-conditioning, as the almost
solely electricity based energy, while winter heating reflects the
cost of other fuels’ diversity, etc.
The second element reflects the micro time scale in which
prices can affect demand. On days or hours when energy is scarcer
prices are set in advance to affect use. One example would be the
use of air conditioning in apartments during working hours.
The third element is the most impressive in that it enables
real time changes to tariffs almost, if you wish, as a retail
reflection of the crude commodity on wholesale world markets.
Section 1252 however, starts ominously. The first sentence
orders electric utilities to provide each customer, with on
request, a time-based rate schedule within 18 months of the
enactment of the Bill. After the promising earlier sections of the
Bill, we are back to the meter as an instrument in the service of
utilities and not a customer orientated tool. Moreover, customers
may be entitled to such a device, but have to request it – a
procedure that may or may not cost them, and may or may not be
feasible within the 18 months allocated to this implementation.
It gets worse. The bill (page 1154) states that utilities may
offer any or none of these services to its customers. In other
words, ‘we said it, but you do whatever you feel like’
legislation. Rarely has anybody spent good money for the purpose
of selling less – which is effectively what the government
‘offers’ utilities to do. Somehow it would not be surprising if
utilities will opt (as they are entitled to) not to provide these
measures.
The most revealing part of this legislation is however in
schedule (F) which puts the whole subject in the appropriate
light: it orders (!) each State to… consider these issues within
18 months. It does not order them to try it, it does not order
them to pilot it, and it does not order them to consult their
customers. No, just to ‘consider’.
In practical terms it allows each State to form an ad-hoc
committee that will meet maybe, 10 times during the 18 months
commencing in August 2005, where they will discuss this matter and
will decide… probably that the time allocated was not sufficient,
or something of this nature.
As expected in Federal legislation, this is said in many more
words and several pages; it also includes issues such as technical
assistance, encouragement, ‘education’, ‘funding demonstration or
pilot projects’ etc., but these are all subject to the result of
the ‘considerations’ that have to be put before the US Congress by
January 2007.
To summarise, the Energy Bill 2005 shows that the legislator or
more probably the advisors and consultants used to formulate it,
understand the essence of the change that is required to move the
energy market forward. The effects of these modifications on the
environment and on consumers also seem clear, as are the
consequences to the energy industry.
It is perhaps this latter element that watered down what is
potentially pioneering and courageous legislation for fear of the
mighty oil and gas industry. After all, if all consumers increased
their energy efficiency by say 20 percent, wouldn’t it reduce
energy sales by the same proportion?
We of course, have no way of knowing what was the process by
which the final wording of this text was reached. However, it
demonstrates how adding or altering one word radically changes the
resulting law. In this case, ordering to consider rather than try,
for example, allows everyone to do very little indeed.
So much for the metering part of the Energy Bill 2005, but what
can we project from it on the thrust of this Act? It encompass
fuels, from oil and gas to renewable and micro-generation through
nuclear and fusion. It looks at social issues and economic aspects
of our energy dependency. This Bill explores subjects as wide
apart as efficiency and equity; productivity and history; and
justice and climate change. It appears to be taking an inclusive
definition of energy issues that by itself is a brave and
long-sighted approach.
However, if the rest of the text is plagued by single words
that negate any purposeful progress, than this bill is really not
worth any debate. If the fear of change drove the legislator into
a watered-down version of their initial drafts it is not going to
affect the American or world energy direction.
In a world where small customers consume almost 40% of national
energy, and where tariff structures rely on their ignorance in
order to compensate for production and distribution
inefficiencies, Smart Metering is not a luxury that should be
toyed with by lip service. Nor should any other aspect of the
Energy Industry. |