July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
Demand-Side Management and Metering Tech
Demand-Side Management & Metering Tech
Combining real-time usage data with the newest technology can earn benefits for utilities.
Some amount of confusion on the part of end-users of electricity is inevitable as the electricity industry evolves. Confusion seems to be a necessary ingredient of change. At PJM Interconnection, we see fusion as the answer to confusion. First is the fusion of technology-both computing and communications technology-with the electric industry. Second is the fusion of pricing and usage information with the end-user's ability to act on that information.
We can maximize efficiency using pricing information. Once customers are able to see and respond to real-time pricing information, the electric industry will be more efficient, and concerns about market power will lessen. Fusion will replace confusion. The questions are, when, and how?
Step Into the Future
Consider the following scenario. Susan heads out to a book club meeting leaving John home paying bills. John reviews the status of the bank statement online before paying any bills not already paid automatically. He notices the electric bill has been paid and recalls that Susan had mentioned reading about an electric product offer that seemed much more closely matched to their needs. They already enjoy the benefits of an electricity home management system, installed when their house was constructed. They jointly chose an electricity supply and management plan that reduces electricity usage, elevating the thermostat by five degrees on hot summer weekday afternoons when the price of electricity reaches or exceeds 10 cents/kWh. This arrangement suits them well because they are "empty nesters" who both work outside the home. However, Susan telecommutes two days per week, so she either packs up her work and heads to the local library on very hot afternoons or overrides the electricity management system and pays the higher cost of 10 cents/kWh for the additional quantity of electricity needed to cool the house the additional five degrees.
The offer John reviews on the electricity supplier's Web site appears to suit their needs better. The new plan provides 20 hours of override per month at the base rate but charges a base rate that is half a cent higher per kilowatt-hour. John e-mails questions to the electricity supplier. His e-mail includes directions to switch their household to the plan if his understanding is correct.
Welcome to fusion. If this scenario seems far-fetched, think again about the Internet technology we use everyday.
Clearly, 21st century technology can and will enable the automation of demand-side response by end-users of electricity. As prices for hardware and software fall, key aspects of demand-side response can and eventually will be automated for data collection, selected pricing information, communication of pricing and usage information, decisions about electric consumption, and implementation of decisions about electric consumption. Energy management providers will assist end users unable or unwilling to use computers. The bottom line is that technology will enable end-users directly or their electricity suppliers/managers to see and respond to real-time wholesale electricity prices. Susan and John selected their product offering on the basis of price and their needs while their