Clean Energy Springfield

Smart metering is more strictly known as "time-based metering," and refers to charging different rates depending on overall demand for electricity, which is strongly based on time and season. The amount of electricity used in a typical day is lowest overnight, rising to peak around five o'clock, and then declining back to that overnight trough. Because of the way that the engineering and economics of electricity generation work, the cheapest sources of power run the overnight load, plus that level (and then some) of the daytime load. When the cheapest source of electricity is running full-bore, then the next most expensive source of electricity is brought online. This keeps going until the oldest, clunkiest (and typically the dirtiest) sources of power are brought on only for the peak of the peak. What this means is that the cost of producing energy basically goes up and down with demand.

The grid, as a whole, works like this, with the electricity that goes into the grid priced at the cost of the most expensive producer feeding into the grid. We, as CWLP's customers, are not priced like that. This means that when costs are highest for CWLP (or for Ameren or Com Ed), we have no incentive (other than whatever persuasion CWLP wants to employ) to cut back our power use.

The key idea behind smart metering is that making consumer prices work a little more like grid prices is more efficient (since people can make better decisions, when the full costs of those decisions are factored in). Given that the costliest energy (of the on-demand generators, at least) also tends to be the dirtiest, smart metering can also be a tool for cleaning up the grid

Now, there are a few problems with smart metering. First, it's capital intensive--it means swapping out the meter you currently have with one that's much more complicated, which must either have enough memory to remember what your energy use was at different times of the day, or that has an always-on communications connection of some sort (a telephone line or an internet connection, such as through wi-fi). (And, logistically, this seems kind of like a nightmare, since in many cases the meter you have to swap out is in someone's basement, like mine.)

Second, some customers don't have much flexibility in adjusting their energy use, particularly those who struggle the most with their bills, like workers living paycheck to paycheck and the fixed-income elderly. (Of course, a vigorous and comprehensive energy efficiency effort would seems like it could alleviate this.)

Nevertheless, smart metering can be a useful tool, because it attacks the worst parts of the energy system, and it does so through price signals--that is, it's a tool that uses the market for virtuous ends. Moreover, in theory, it can be good for the utility by reducing the capacity needed for peak energy demand, and also by reducing transmission congestion. (I should say that, not being an electrical engineer, I don't understand the transmission congestion issue.)

(UPDATE: For further reaches of where smart metering can get us, check out this article from Grist.)

Now, that's my quick overview. If you want it in more detail (or if you don't trust me), take a look at CWLP's smart metering recommendation (PDF), wherein you'll see (1) actual graphs of CWLP's demand throughout the day! and (2) that I've been talking about smart metering as one thing, when it's actually three (time-of-use pricing, critical peak pricing, and real-time pricing). Also, I should point out that CWLP already has a very rudimentary form of time-of-use metering in place: seasonal pricing, where they have different rates for summer and winter.

Here's essentially what CWLP is recommending for this standard:

• Adopt one mode of smart metering for large commercial customers.


• Those customers must go through an engineering analysis to ensure that they can actually shift their demand.


• Re-analyze the CWLP's infrastructure costs, so as to bill that separately from energy use for these customers


• That there be at least 10 of these large commercial customers before starting the program.

CWLP recommends that they not adopt the standard in any form for residential customers.

Here, in a nutshell, are CWLP's concerns that lead them to these recommendations:

• Revenue neutrality: CWLP wants to ensure that customers pay for the services that they use, so they want to fund any smart metering program through the program participants. More importantly, however, they also want to ensure that customers who participate don't reap a windfall through the changed rate structure, simply because they already use power at off-peak times. They would lose revenue, without gaining any of the benefits of smart metering. To some extent, CES shares this concern [* see below the fold for some background on this].
• Capital cost: Starting a smart metering effort means, well, upgrading electricity meters, for one. But it may also involve putting a communications system in place. And it appears that it involves some sort of computer system upgrade for how CWLP bills these customers. CWLP feels that, comparing these costs against the benefits it would receive (peak load reduction and reduced transmission congestion), the benefits don't approach the costs. They say that doing all of this is "very expensive," but (1) it's hard to get a sense of what they mean by very expensive and (2) they don't give any context for how feasible it would be to fund such an expense, either through bonding or through CWLP's upcoming Environmental Initiatives Fund, paid for out of revenue from sales of the new power plant to the grid.
• Residential load shifting: CWLP feels that residential customers are not able to shift their demand in response to price peaks.

Clean Energy Springfield agrees with CWLP's recommendation for commercial customers. However, we feel that CWLP should not reject the standard for residential customers. Once a smart metering program is in place for commercial customers, adding a residential component should be less costly, since CWLP will be building on infrastructure they've already put into place. In particular, we feel that CWLP should begin planning for how to do a pilot program to test smart metering among residential customers.

In addition to that general stance, we have a few other comments applicable to this standard:

• First, some of CWLP's concerns relate to the memory required in every meter if it is to track time of energy use; alternately, they must include a communications system for every meter. Nowhere in CWLP's discussion of this standard do they consider the possibility that such a communication system might be forthcoming if the city pursues plans for a city-wide wireless network. Such a network would radically change the feasibility and cost of a smart metering program. However, even in the absence of such a citywide network, we feel that CWLP overstates the problem. Imagine, for instance, a program where entire neighborhoods opt-in. In such a case, one central meter could be equipped with a hard line (a telephone connection, basically) to communicate with CWLP, and a wireless node to communicate with the surrounding households' meters. CES is confident that CWLP staff could likely devise many such cost-saving scenarios, once they commit to finding a way to make smart metering work.


• Second, even if smart metering is not appropriate for the typical residential customer, it may be appropriate for those who are net metering (check back tomorrow for our stance on net metering). Connecting smart meters to net meters will allow CWLP to better price the contribution that those customers make to CWLP's grid.


• Third, in considering this standard, CWLP should consider the social benefits of peak load reduction, and not just the utility benefits. Moreoever, because for some time into the future, CWLP will be an energy retailer (because of the excess capacity from the new power plant), CWLP should consider its ability to increase sales at the price peaks on the midwest electricity grid when considering what benefits it receives. While some people have in the past criticized environmentalists when we promote sales to the grid from the new power plant as a source of revenue, we feel that it is a reasonable and realistic tool for making Springfield's transition to a soft energy path as smooth and painless as possible.


• Lastly, even if CWLP is correct that residential customers are not able to shift their loads away from peak times, this suggests that residential customers are primarily captives of their infrastructure--their homes. Thus, we believe that CWLP should investigate the use of smart metering for all new residential developments in Springfield. If developers know that their customers will be paying more for peak energy use, they will design their houses to reduce that peak load, either through increased efficiency, or the incorporation of photovoltaics (which generally produce power at exactly times of peak demand--hot summer days). Moreover, CWLP should and can be a hugely important resource in helping developers determine how best to go about doing so. In fact, starting with this, they could become a general resource for encouraging green building practices among developers.

For these reasons, we support CWLP's recommendation for their commercial customers for this standard, but request that they adopt the standard with modifications for their residential customers as well, to set themselves with the task of exploring the many different ways that smart metering can be tried for residential customers in Springfield.

If you agree with this, here's some of the things you might submit to CWLP in comments:

• CWLP should adopt the time-based metering standard for residential customers, with the goal of developing a trial program.
• CWLP should consider the use of smart-metering as a tool for encouraging the use of small-scale solar power through its net metering program.
• CWLP should consider using smart metering as a way of encouraging greener buildings in all new construction.