(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit...
I Want My In-Home Display
Consumers await a revolutionary interface.
modest type of-real-time display; it operates the largest prepaid metering program in North America.
Prevalent in Europe and Australia, prepaid meters are most commonly associated with low-income customers in North America. Customers buy up to a $500 electricity credit on a card at one of 72 centers around Phoenix, take the card home and swipe it in a meter that displays cost and usage.
The fully elective program, which started in the 1990s, is on its third generation of meters. SRP currently has 54,000 prepaid customers.
“We’re finding on average these customers save about 12 percent a year, so they are conserving,” Collins relates. “They see how much they are spending each day, how much they have left, and based on their last seven days of usage, it calculates how many days energy they have remaining.”
That’s half the battle—providing the connection between behavior and cost. But basic prepaid meters don’t offer the advanced efficiencies possible via a home-area-network (HAN) enabled meter.
Turning the Corner
Texas is the deregulation frontier in America today, so if competition-driven advances happen anywhere, Texas will be first, right? Well, not exactly. Because of the way the Texas market is segmented, the benefits of advanced meters don’t accrue to the companies whose duty it is to install them.
Consider the predicament of CenterPoint Energy. A wires company, CenterPoint is taking a cautious approach to its rollout of HAN-enabled smart meters. The state’s scores of energy retailers, meanwhile, are champing at the bit. The meters will allow them almost unlimited creativity in the products, prices and demand-response options they can offer customers, and presumably will increase their profits.
Texas regulators are pushing hard for smart meters, too, but wires companies are struggling to figure out the economics. Distribution companies’ profits are regulated, so their smart-meter costs must be covered by operational efficiencies, or via approved rate changes. Without certainty about how the market will evolve, CenterPoint wants to test the waters gradually. It has proposed a phased rollout that would deploy 250,000 smart meters starting in September 2009.
“We just want to make sure everybody’s sure. We don’t want to look back and ask, ‘why did we spend all that money?’” says Don Cortez, CenterPoint’s vice president of regulated operations technology.
Texas retail utilities are so eager that they have offered to advance the cost of the first 125,000 meters just to get the ball rolling. That proposal is awaiting regulatory approval.
So if not Texas, where?
“Once again California will be the crucible,” Faruqui says. “Other states like New York, Florida, Texas, Wisconsin and Illinois are all looking at California.”
In fact, Southern California Edison is poised to roll out a fully HAN-enabled meter in January, with demand response coming online a year later. California is a partially deregulated state, but SCE is still vertically integrated from generation to its bundled customer base, so it has better prospects for return on investment. The company expects an almost perfect cost offset.
“Roughly 60 percent of the benefits will come from operational savings, including labor,” explains Paul De Martini,