What Smart Meters Can Teach Us

Lately, smart meters have been getting bad press as a waste of money that failed to bring any savings to consumers. I was always skeptical of the proposition that consumers would be able to shift (or reduce) their energy use patterns in response to variable time-of-use (TOU) pricing. It’s been confirmed now that there is actually little saving to be had for consumers, especially as electric rates continue to rise. It’s also apparent now that the real benefits of smart meters accrued more to the producers of energy, not consumers. Some of the main benefits described were:

  • An end to estimated billing
  • Elimination of manual meter reading
  • Quicker power outage notification and restoration
  • Improved system efficiency (monitoring of power quality)
  • Reduced electricity theft (meters are at more distribution points)

Smart meters are necessary to integrate renewable energy sources into the grid, which would enable cleaner power and environmental benefits. Hydro One claimed to be installing smart meters “to build a culture of conservation in Ontario”. 

An American organization, the Edison Foundation Institute for Electric Innovation estimated that smart meters in the U.S. would cost, on average, $198 to $272 based on a service area of 1 million households. Their report predicted that utilities would entirely recover their costs in savings. Installation cost of Ontario’s 4.8 million smart meters ranged from $81 to $544. Ontario Hydro was responsible for a substantially disproportionate share of the cost – about 25% of the units, but almost half of the cost.

The theory is that “billing customers by time-of-day will encourage consumers to adjust their consumption habits to be more responsive to market prices and … that regulatory and market design agencies hope these “price signals” could delay the construction of additional generation or at least the purchase of energy from higher priced sources, thereby controlling the steady and rapid increase of electricity prices.” (Wikipedia)

Evidently, we’ve failed so far in both of those objectives to avoid new generating construction and high-priced imports. I found the most succinct explanation of the real purpose of smart meters on an American blog:

“the real purpose of the smart meter is to substitute average cost pricing that has kept rates stable for 100 years with dynamic pricing that raises the unit price of power just when you need it most causing utility bill spikes on peak load day usage to cut demand.” (Is the Worst Yet to Come for Smart Meters, January, 2011)

In Ontario, we wanted to move from coal-powered generation to relatively cleaner natural gas, and diversify generation to renewable sources. We opened the door to private investment and ownership of power plants. Smart meters became the mechanism for private investors to recover their money faster, and to reap a handsome profit thereafter. In retrospect, how could we expect lower electric rates when profit is factored into the equation? But now electricity generation and distribution is about to be turned on its head. And smart meters will be a key part of that transformation.

Reading:
Rapid Change Undermines Utilities, John Spears, Toronto Star, Dec 27, 2014
Will Distributed Solar Drive Utilities into Bankruptcy?, Renewable Energy World.com, February 28, 2011

 

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2 thoughts on “What Smart Meters Can Teach Us

    • Thanks for your comment. I agree, all levels of government have been dragging their feet on investments in conservation measures, and renewable energy thanks to the oil lobby, the nuclear lobby, and the existing electricity operators.

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