Smart meters ‘drive’ pricing for energy use

In my last column, I emphasized the incredible amount of energy we use in our daily lives and how it is often taken for granted. A reader subsequently expressed his willingness to conserve energy but also conveyed some trepidation about NV Energy's new "smart meter" program that is getting under way in Nevada. It seems that many people have similar concerns. It's a timely topic and since it is still Energy Awareness Month, let's take a closer look at smart meters.

Whether you can read one or not, we're all familiar with the electric meters mounted on the side of every home. They provide a running total of the electricity we use. The old analog meters have cryptic dials that aren't very user-friendly; the new meters have digital displays that are easy to understand.

But even those few who can actually read their meter rarely bother with it. NV Energy employees have to physically read each analog meter every month to see how much energy has been used by each customer. For a product that moves at the speed of light, this is an antiquated system desperately in need of improvement.

Imagine a car with the speedometer mounted on the back fender. You can't see it when you're driving and you never look at it anyway. The car provides few visual or auditory clues as to its actual speed.

To make it really interesting, imagine it can be controlled by multiple drivers simultaneously. Going too fast would cost plenty (maybe even a speeding ticket), but you wouldn't know about it until your monthly bill came in the mail (after someone drove to your car to check the speedometer on the fender for you). The statement would provide no details, only the total miles travelled and the average per day.

Your only option is to pay the price, however high, since any opportunity to slow down when appropriate was long gone. Of course a car like that would be totally impractical, yet it is very similar to the way we actually "drive" our homes when it comes to energy use.

Smart meters provide usage data to the utility company electronically and at much greater frequency. The "real time" information will be available to customers in a number of ways (see nvenergy.com for details). That is important to those who wish to conserve resources, lower their energy bill or who just believe in paying for things at fair market value.

Due to the nature of electricity, the cost to provide it to your home varies significantly. Power companies must generate enough energy to match customer demand at any given moment, but the demand fluctuates a lot. Power plants that cost the least to operate typically run the most. They are the so-called "base load" generators and put out a steady amount of power 24/7. Other plants are brought online as needed, but their operational costs get progressively higher. Power can also be purchased over the grid from other suppliers, with the law of supply and demand driving rates up significantly when demand is highest.

Ignoring these variations, through our current system of flat-rate pricing for example, amounts to a subsidy for those who choose to waste expensive energy as well as overpaying for energy that is really cheaper at certain times. Information is power, thus a smart meter can lead to wiser energy use and lower costs for rate-payers. The benefits won't stop there, however.

Accurate pricing of energy will lead to innovations in products, appliances and beneficial changes in building design, construction and codes. Energy-aware products and building systems can automatically shift energy use to when it is the most economical and smart meters will help provide the incentive to do so. In the not-too-distant future, similar technology applied to our entire grid will instantly match loads to natural variations in renewable energy production, allowing greater integration of clean energy systems at lower cost.

Smart meters are not part of a sinister plan to shift more of your hard-earned dollars to the utility. Rather, they represent a vital next step in modernizing our energy infrastructure that will result in more efficiency, less pollution, lower costs and a healthier planet for all.

Steve Rypka is a green living consultant and president of GreenDream Enterprises, a company committed to helping people live lighter on the planet. For more information and links to additional resources relating to this column, or to reach Steve, please visit www.greendream.biz.