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Regulators to Blame? How Competitive Metering Has Failed

Fortnightly Magazine - November 15 2001

officer, of Puget Sound Energy. He made the following points:

"You make the point that we can accomplish a shift in usage with programs for which customers actively volunteer. I think that was true with old systems when customers didn't get any feedback on their usage, and it was just a fixed time-of-use rate that was in place that didn't have anything to do with what was going on in the market place. But today, we have the capability to give near real-time feedback with the metering technology currently available. If we are going to get the real value out of the deployment of metering and the other technologies needed to achieve a demand response to the wholesale price of electricity, then we are going to need to make sure that everyone participates."

"The experience with our program up here, where we have 300,000 customers on time-of-day pricing, is that they like being on it even though they were put on the program with an opt-out provision.

Our experience to date is that less than one percent has opted out and, more importantly, according to the survey we have done, 90 percent understand, accept, like, and use the program "Our experience with active-volunteer systems is that very few people volunteer unless you put an awful lot of effort into marketing, and even then the numbers are small. Also, the only ones who volunteer are the ones who can save and everyone else will stay away, which means the energy wasters or the ones who don't care when they use it don't participate and they have no incentive to do so.

"Deployment of a demand response system really has nothing to do with deregulation. It has to do with the ability of the customers using energy to see the price of the energy they are using at the time they are using it, and, if they believe it's too expensive, they can choose not to use it. Even in regulated retail markets, the wholesale cost of electricity has to get passed along to the end-use customer eventually, so even in those circumstances customers can help influence the wholesale price they will pay by reacting to the price.

"There is a misconception that has existed for some time that demand response systems only make sense in areas where states have deregulated and retail access is available to customers. Washington State is a good example of where we have not deregulated but we have the largest deployment of real-time metering in the country. Our customers understand that they can help control the wholesale price of electricity that we as the utility have to pay and pass along to them. They are very supportive of what we are doing and the information they have available to them."

-C.K.

Another item which UK meter suppliers complained about was a "lack of customer density." 15 This is because metering enjoys significant scale economies inherent in density: it is cheaper to install, maintain, and read meters that are physically close together than meters that are dispersed. In a study