California: New Power Meters Show Users the Money

Two years ago, the 42-year-old furniture salesman had an "advanced" electricity meter installed in his Valencia home as part of a pilot project designed to see whether the high-tech devices could help customers save power.

As far as Wong is concerned, it worked. On hot summer afternoons in the Santa Clarita Valley — when power prices are at their highest — the meter and a "smart" thermostat that displayed real-time electricity prices helped Wong reduce power consumption and cut his monthly bill by almost 30%, from about $70 to $50.

"I could plan my cost and usage instead of guessing," he said. "I could see where I was using too much energy and reduce it."

Wong's enthusiasm is shared by California regulators and two of the state's biggest utilities. Pacific Gas & Electric Co. and San Diego Gas & Electric Co. plan to spend $2 billion over the next several years installing millions of the advanced meters in homes across the Golden State. Customers can expect a small hike in electricity rates to pay for the program.

The meters are actually mini-computers that communicate with a utility's central data center, providing real-time information on how much electricity a customer is using and when it's being used.

Data provided by the meters enable utilities to offer voluntary "variable pricing" plans. Under the plans, customers are charged more for power used during peak periods such as weekday afternoons when electricity supplies are tight and prices are high, and less at night and on weekends, when demand and prices are lower.

The goal is to alleviate the state's power crunch by giving customers a financial reward for running their dishwashers at night — or dinging them for jacking up the air conditioning on hot afternoons.

There's a bonus for utilities: They currently employ thousands of meter readers who periodically slip into backyards to manually record customers' electricity use — jobs that would go the way of the milkman if advanced metering became universal.

"I always knew this was coming. Technology has pretty much taken over," said Mike Boyle, a PG&E worker who says he reads as many as 1,300 meters a day in Vacaville, northeast of San Francisco.

Like the Flex Your Power program the state launched during the 2000-01 energy crisis, advanced metering relies on consumers to voluntarily reduce the amount of electricity they use. But regulators hope variable pricing will promote conservation in a state where rolling blackouts remain a threat.

Similar schemes have cut power consumption and costs in Pennsylvania, Florida, Sweden and elsewhere, said California Energy Commission member Arthur Rosenfield. The energy commission thinks the program could cut energy use in California by 1% on peak summer days, when the danger of blackouts is greatest. In addition, the program would reduce the hidden subsidy that residents of the state's cooler coastal regions pay to support the energy needs of the fast-growing interior valley and high desert regions, he said.

In the state-sponsored pilot project, high-tech meters
were installed in 2,500 homes and the customers were billed under a variety of variable-pricing plans. Electricity use fell by an average of 13%.

"The old straw that electricity demand [isn't affected by price] is not true at all," said Roger Levy, a consultant with the energy commission.

The pilot project made a believer out of Robert Birkmaier, a PG&E customer who runs a contracting business from his five-bedroom home in Merced. Birkmaier was able to cut his electricity bill by 25% even while battling the San Joaquin Valley's torrid summer heat.

"I got to be a little smart," he said. "If I know it's
going to be hot, I close up the windows and the house at 10 or 11 [in the morning] and stay fairly comfortable until 3 or 4 p.m. I don't turn on the air conditioner until 7," when rates drop.

Birkmaier said he didn't mind paying extra to run his air conditioner a little earlier on occasion. "If I have a dinner party going and guests are coming for dinner, I bite the bullet and flip on the air conditioner."

Participants in the pilot program who were provided with "smart" electronic thermostats in addition to advanced meters enjoyed even greater control over their kilowatts.

Kathy Chomuk, who lives in Valencia with her husband and son in a 2,400-square-foot house, said the thermostat provided pricing information that helped her manage her household budget and her chores.

One afternoon, the 43-year-old legal secretary recalled, she planned to do a load of laundry. But first she checked her thermostat.

"Rates were about 26 cents [per kilowatt-hour], so I said, 'Forget it,' " Chomuk said. The clothes were washed a few hours later, when the rate dropped to 9 cents.

Armed with the pilot project results, PG&E will begin installing 5 million advanced meters this fall in Northern and Central California. In Orange and San Diego counties, SDG&E is moving ahead with plans to put 1.3 million new electric meters in homes and small businesses in 2008 and 2009.

Not everyone is convinced that the average ratepayer really wants to micromanage energy consumption.

"People don't spend every waking moment thinking about the average cost of electricity," said Marc Joseph, an attorney with the meter readers' union.

And even if they did, skeptics say, energy conservation wouldn't necessarily follow.

"If I'm a residential customer and it's hot outside, I've got to run my air conditioner," said Bob Finkelstein, executive director of the Utility Reform Network, a ratepayer advocacy group known as TURN.

"I'm not going to go home and unplug my refrigerator from 4 to 7 p.m."

In filings with the state Public Utilities Commission, which sponsored the pilot program, TURN contends that PG&E overestimated the benefits and underestimated the costs of the utility's advanced meter proposal.

Advanced meters cost about $100 each, and PG&E said it would recover its initial investment by raising residential and small-business electricity rates by an average of 1.1%. Buying — and paying for — smart thermostats would be left up to the customers.

The meters should quickly pay for themselves and lead to lower rates over time, said Jana Corey, PG&E's advanced metering project manager.

The utility expects to recover most of the $1.6-billion cost of the program by eliminating its 900 meter readers and by shrinking other operational costs. Other cost savings made possible by the advanced meters include spotting the exact location of outages before dispatching line repair crews; reducing power theft; and giving customers more accurate billing statements. In addition, cutting power use would reduce the need to build power plants.

More savings would come from tying about 4,000 natural gas meters into the remote meter network, although gas bills still would be based on a per-unit price for total monthly consumption.

Existing discounts for low-income, elderly and infirm customers would be unaffected by the new pricing.

In contrast to PG&E and SDG&E, the state's third big investor-owned utility is taking a slower approach to advanced metering. Southern California Edison Co., which has more than 4 million residential and small-business customers in the Los Angeles Basin and parts of the coast and Central Valley, says it's waiting to develop even smarter meters and won't shift completely to the new technology until 2013.

Los Angeles' Department of Water and Power, with 1.4 million customers, said it had no plan to install advanced meters.

Edison says it has already made its transmission system more efficient and wouldn't get the same savings as PG&E and SDG&E with the current generation of meters.

"The benefits have to be greater than the costs, and with the existing technology, that's not the case," said Lynda L. Ziegler, Edison's vice president of customer programs and services.

Birkmaier, the Merced resident, might disagree. A little knowledge, he figures, can turn even the most die-hard kilowatt burner into a conservationist.

"Most people are a little ignorant about power," he said. "They get up in the morning and want to shave but don't know where those electrons are coming from.

"But if you sting 'em with more money, they'll start learning."