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Category — Real-time pricing/’smart’ meters

Smart Meter Chaos: Maryland PSC Gets Real (consumerism, anyone?)

“The Proposal would not, in and of itself, enhance the electricity transmission grid or the Company’s distribution ‘backbone,’ and therefore it doesn’t justify the proposed customer surcharge by BG&E.”

- Public Service Commission of Maryland, IN THE MATTER OF THE APPLICATION BEFORE THE OF BALTIMORE GAS AND ELECTRIC COMPANY FOR AUTHORIZATION TO DEPLOY A SMART GRID INITIATIVE  AND TO ESTABLISH A SURCHARGE FOR THE RECOVERY OF COST CASE NO. 9208 (June 22, 2010)

The smartest guys in the electricity room believe that a path to energy efficiency and environmental goodness is to hook up so-called smart meters for us little users. The smart machines would signal (jolt?) us to use less power in peak times when the price is high and to use power more when the price is low.

But the very concept has problems aplenty. First, time-of-use pricing for residentials (versus commercial and industrial customers) is a nice ‘green’ theory, not fact. Some states like California do not want or allow such residential pricing because of equity concerns. 

Second, so-called smart meters are all about government (taxpayer) and class ratepayer subsidies, not stand-alone economics between willing buyers and sellers. 

Third, there is the hassle factor (called transaction costs) of setting up appliances with time-of-day usage. Relatedly, (in)flexibility costs are incurred.

And last but not least, smart meters are intrusive. Big Environmental Brother lurks behind each smart meter to tell you what to do and when to do it. Civil libertarians take note of this government-dependent machine. 

Smart meters as ENERGY POLICY appear to be penny-wise and pound foolish. But members of an eco-energy elite want to individually pay by the pound to impress the neighbors and save the world, let them be ‘early adopters’. And perhaps these special users should also pay the costs of utility manpower in setting up time-of-day pricing to leave nonusers whole. Such is life under public utility regulation.

Make no mistake: smart meters are not a ‘let-the-market decide’ proposition. If they were, utility customers could decide individually and on a stand-alone basis whether or not to buy and install the meters. This should be an individual demander-to-provider proposition without other ratepayers or taxpayers involvement.

One final point: the federal budget is in horrendous deficit. Smart-meter money earmarked for Maryland should not be redistributed by the Department of Energy to other states as planned. The monies should be axed from the budget, reducing the deficit on a dollar-for-dollar basis.

And by removing this component of the program, the broader Smart Grid investment concept, which has all the earmarks of a rate base perversity as explained by Robert Michaels, can be given a reality check as well.

From the PSCM Decision [Read more →]

June 25, 2010   12 Comments

Smart Grid: Can 'Smart Metering' Overcome the Hassle Factor? (transaction costs matter too)

When asked for conjectures about the Smart Grid, economists’ imaginations become almost indecently fertile. Writing in her blog, market-friendly Lynne Kiesling sees astounding dividends from real-time pricing and smart grid technology, preferably with competitive retail service.

Say, for example, you are on the train to work, and you get a SMS [ text message] notification that due to unexpected weather, there will be a higher-than-normal electricity price in the 9:00-10:00 hour. You may have already programmed your devices to respond to price signals, but what if the price is high enough that you want to change your settings? You can log in to your HAN [Home Area Network] from your mobile device, or from your computer at work, and change the device settings in the home through the web portal. … [i]f the home has e.g. solar PV panels the customer can program the network to reduce electricity use once the home’s consumption reaches the generation capacity of the solar resource.

But what is wrong with this picture? [Read more →]

May 29, 2009   4 Comments