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Selling the Smart Grid - The Policy

Why many state regulators still have qualms about endorsing smart meters.

Fortnightly Magazine - April 2008


On a similar point, Virginia opposed mandating time-based metering or equipment for utilities that purchase wholesale power through long-term contracts or other arrangements that offer no options for the purchasing utility to obtain time-based cost variations. (Va.S.C.C., Case PUE-2006-00003, July 18, 2006, at 251 PUR4th 350.)

In declining the EPAct standard, several states declared that retail electric customers simply don’t have any real enthusiasm for smart meters or the constant tracking of real-time or hourly prices that such technology would allow.

Kentucky: “All the electric utilities testified that they have found little or no interest in TOU rates by residential customers.”

Minnesota: “A smart metering system could have potentially negative consequences for low- and fixed-income and low-usage utility customers, who have limited ability to access information sources such as the Internet.” (Case E-999/CI-06-a59, Aug. 10, 2007.)

Virginia: “Customers may not be capable of or willing to, among other things, vary demand and usage in response to changes in prices based on specific time periods, manage costs by shifting usage to lower cost or [sic] off-peak time periods, or reducing consumption.”

Wyoming: “This section [the EPAct standard] is not a real opportunity for Wyoming ratepayers because the economic and social makeup of the state does not make smart metering a useful tool.” (Docket No. 90000-95-XR-06.)

North Carolina regulators worried that mandatory deployment of smart meters could force the state’s major electric utilities to phase-out newly installed AMR-capable meters that had been installed only recently to replace old-fashioned, manual-read meters. “The AMR meters are in the early years of their life-span,” the commission noted. “It would not be cost-effective to remove large numbers of relatively new meters.”

Utah gave voice to the strong undercurrent found in many PUC cases—the persistent belief among state regulators that administrative, top-down tariffs and load-management programs might achieve more energy conservation and efficiency, lower rates, and customer welfare, than bottom-up metering deployments that rely on effective decision-making by empowered consumers:

“We suggest, however, there is a larger issue which will not be addressed by a cost-benefit analysis … whether adoption of a smart metering standard is more effective in addressing PURPA goals than, say …new or existing demand management programs or modifications to the existing time-of-day rate schedules.”

Bucking the tide is South Carolina, which directed utilities both to make smart meters “available” to customers, and to initiate a PR campaign to win loyalty from customers:

“We note conspicuous lack of focus on residential and commercial customers with respect to smart metering.

“We therefore order the utilities to … inform all customers of the availability and capability of smart meters, how they may use those capabilities to better manage their power requirements.” (Dockets 2005-385-E, 2005-386-E, Order 2007-618, Aug. 30, 2007.)

Cost-Benefit Analysis

It may be that smart-meter deployment never will pan out as cost-effective unless meter proponents are allowed to cite societal or intangible benefits to prove cost-effectiveness. Indeed, some regulators—and not just those in progressive states like California—are encouraging such an approach. The Ohio PUC, for example, ruled the smart metering cost-benefit analysis