Utilities have learned a lot about how smart meters can compel consumers to save electricity. Unfortunately, too often they aren't putting the knowledge to good use.
Smart meters are more precise than traditional meters in that they send readings on electricity usage to utility billing departments throughout the day. Not only do smart meters provide customers with a clearer picture of how they use electricity on a daily basis, they also 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.
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. Only about 5% of U.S. electric meters are "smart" today, according to the U.S. Department of Energy, but that figure is expected to grow to about one-third in the next five years.
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. By doing things like turning off clothes dryers and adjusting air conditioners on hot summer afternoons, customers earn credits that can reduce their electricity bills.
From The Wall Street Journal
View Full Article