December 14, 2009
Ken Silverstein
EnergyBiz Insider
Editor-in-Chief
In some circles, pushing smart meters may end up being dumb policy. A wave of public relations is now drowning out the skeptical voices necessary to assure that the public does not get bamboozled, some consumer advocacy groups say.
The essence of their argument is that smart meters that are able to reach inside homes and adjust energy consumption have yet to bear fruit. And if they are unable to do so, then it would be consumers who pay the price for any failures.
"The concept that customers can reduce load on peak days and pay less is solid," says Bill Fields, a senior advisor to the Maryland People's Council and chairman of the electricity committee for the National Association of State Utility Consumer Advocates. "That's been going on a while. It is a question, however, of whether the advanced meter initiatives are the most cost effective way to accomplish that. We have proven methods already. What more does it achieve for us to do advanced meters?"
Consider Baltimore Gas & Electric, which plans to replace meters that have a long lifespan and which have not been fully depreciated: To complete the job, it will cost around $500 million and consumer advocates there are unconvinced of the professed benefits. Beyond the high price tag, they say that the utility already has a "cycling program" whereby it can turn off air conditioners during peak hours.
Consumer advocates say that state utility commissions are under increasing pressure to enact smart grid programs with an advanced metering component. It's especially true now that $4.5 billion in federal stimulus monies is being made available to valid projects. Fields says that commissioners must exercise restraint, noting that rushing headlong into something that is unproven and so expensive might later be regretted.
The premise behind installing smart meters is to create two-way communications between utilities and their customers in an effort to shave energy consumption during the most expensive periods. Doing so would then make more room on the grid for alternative energy sources such as wind and solar.
If done right, the utility industry could save between $50 billion and $100 billion over the next two decades if such demand response programs became the norm, says the Rand Corp. That not only translates into better prices for consumers but it also means that the stresses on power plants would be diminished, along with the subsequent emissions.
The possibilities for advanced meters are huge. There are now about 130 million meters in the United States alone. Of those, only about 10 million or so have high-tech gadgetry to facilitate automated meter reading or remote temperature control. Utilities may provide the meters or it may retrofit older ones.
Electricity Flow
The architects of the intelligent utility do not necessarily disagree with the concerns raised by some of the consumer advocates. But they say that a key distinction must be made between the "smart grid" and "smart meters."
According to Ray Gogel, president of the CURRENT Group that makes smart grid software, enhancing the "middle mile" between the generation source and the home has shown that it adds significant value. Technology that is able to analyze electricity flow, for example, can increase reliability and diminish volatility by allowing utilities to pinpoint overloaded transformers and therefore avoid power outages.
In the case of Xcel's SmartGridCity in Boulder that the CURRENT Group helped design and which is now operational, no customer complaints have been registered this year with respect to low voltage lighting issues. Two years ago, by comparison, there were 50.
The verdict on the "last mile," or from the meter into the home, is still out, says Gogel. If smart meters are to work, utilities must be able to get consumers to interact with them and become proactive by investing in the various gadgets that allow their utilities to talk to them. It also means learning how electricity is produced and priced and then working with their providers to curb usage. Toward that end, utilities and policymakers have a lot of consumer education ahead of them.
"Most of the value will come out of the 'middle mile'," says Gogel. "It's still too early to tell whether the 'last mile' will pay off."
Consumer advocates would, in fact, agree with that assessment. Charlie Acquard, executive director of the National Association of State Utility Consumer Advocates says that upgrades to the transmission system so as to make it more efficient and to accommodate more renewable energy are wise. But investments in new meters may be akin to "shiny new toys" that may amount to nothing more than false promises.
Before state regulators would "ram through" policies that would force utilities to replace their existing "dumb" meters with those that are said to be "smart," he suggests that they perform thorough studies and pilot projects. After all the details are meticulously examined and if they are demonstrated to work, then a concentrated effort must be made to educate consumers through bill stuffers and public service announcements.
"Smart meters can be costly and we do not know how consumers will respond to them," says Acquard. "We want to see how cost effective they will be when compared to the current technologies."
Modernizing the transmission grid is generally considered necessary to increase reliability and to deliver more green energy. But speculation on smart meters per se is less popular and even worrisome. It's particularly true among some advocacy groups who feel that consumers may fare better by conserving energy the old fashioned way.
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