Technology Corridor

Utilities are finding strategic benefits in demand-based metering technologies.

It's been years since utilities regarded customers as mere check-writing extensions of their meters. In fact, utilities' information technology focus during the past decade has centered on gaining greater control over customer information. The objective: Focus on-and fill-customer needs. The results are everywhere:

• Consolidated and converged bills;
• Call centers that answer questions immediately;
• Internet-based self-service; and
• Billing options.

Now a new era is emerging. Customers of all sizes are starting to control energy consumption in response to market signals. The vehicle for this change is the sophisticated metering technology now being pushed down from larger to smaller customers.

Time-of-use meters once reserved for large commercial sites are finding their way to the home. Office buildings and other businesses, in turn, are installing interval meters that were previously reserved for large industrial sites.

States and utilities have long permitted residential time-of-use meters. It took California's deregulatory woes, however, to bring time-of-use metering to the general public's attention. Time-of-use metering promised financial rewards to consumers trying to alleviate the crisis by switching consumption to off-peak hours-and penalties for neighbors who let their pool heaters run during the daytime. Today, California is one of a number of states in various stages of pushing sophisticated meters into the home to empower consumers.

Similarly, Idaho Power has initiated a pilot program to test the value of more sophisticated residential meters. Through the "installation of critical peak TOU-capable equipment," regulators hope the Idaho Power program will give consumers control and demonstrate the meters' contribution to demand response and load control-a recognition that even the smallest customers can help maintain grid stability and reduce the long-term cost of excess transmission capacity.

Demand Response

Demand response is a relatively recent trend. It allows utilities to use market-based signals like price and incentives to encourage specific consumption behavior during specific periods by customers of any size.

Most of today's demand-response programs require considerable interaction between utility and customer.

Typically, utilities short on resources or experiencing excess demand, or both, ask volunteer facilities to cut back during a specific period. They reward those that respond with financial incentives in proportion to the length and size of the reduction.

Demand response replaces the old "interruptible rate" model, under which utilities controlled power cuts. Demand response, in contrast, permits customers to define their level of participation each time the utility requests a reduction. They can weigh the energy cost against the value of their production, maintaining full supply, during, for instance, critical manufacturing processes, while reducing it if the only results will be a few complaints from warmer-than-usual office workers.

Idaho's pilot is one of the first to test this concept with consumers. But increasing numbers of utilities are using it with larger customers. The Edison Electric Institute reported as early as 2001 that 27 of its utility members were offering some form of demand response. ¹ That number has continued growing ² though most programs are preliminary or relatively simplistic in nature. Still, the results are promising. A 2001 New York program