Smart Meters Controversy

Controlling Energy Spend-How Smart Meters Will Benefit Commercial Customers

By Matthew Kim, Prenova
We've all heard that the only guarantees in life are death and taxes. We in the power industry can add one more: Customers will resist smart meters without powerful and immediate cost benefits.
We're already seeing things happen in California and Texas, and it's likely that customers in other markets will follow. While most protests thus far have come from residential customers, it's vital to watch how commercial customers react. If the business community thinks smart meters drive up energy costs, they will react just as quickly and negatively as the residential sector.

With technology advancing quickly and customers looking for information, the utility industry must effectively communicate the benefits of smart meters and other smart grid technology. Although homeowners have cited information security and personal privacy as major concerns, the biggest protests come from those who say they are being overcharged for electricity. Side-by-side tests to confirm meter accuracy are still under way, but higher costs are more likely to be the result of an unusually cold winter. Had winter temperatures been closer to normal, fewer people would have been shocked by their electricity bills.

A similar problem is approaching as a result of improving economic conditions. Natural gas prices are significantly lower than normal, meaning gas-fired generation is cheaper than it has been in several years. In summer 2008, a contract for 1,000 cubic feet was hovering above $13, while in summer 2009 it was less than $4. As the economy begins to recover, increasing demand and depleted reserves for natural gas will drive costs up again. Electricity rates will rise particularly in areas dependent on natural gas for generation. Customers must understand that these inevitable rate increases are results of market forces and are not because of smart meter technology implementation.

Smart meter technology enables utilities to communicate pricing information directly to end customers, making it possible to implement broad-scale dynamic pricing. This is good for the utility industry, but it might present a challenge for commercial customers. Consider a commercial office building. Unlike many industrial facilities, few commercial buildings are occupied 24/7. Rather, they are generally busiest from 8 a.m. to 5 p.m. Monday through Friday. Therefore, the majority of their energy use occurs during peak hours. Moving to a time-of-use rate structure could result in higher energy costs than a fixed-rate structure.

If you accept that dynamic pricing is the future of the utility industry, then you'll see why this could pose a problem for commercial customers. The technology holds the solution: Smart meters, in combination with other readily available applications and technologies, make it possible for building operators to proactively manage their property to use less energy when rates are highest.

While this might sound time-consuming, many smart meters already communicate energy prices and allow customers to monitor consumption in real time. More advanced solutions generate alerts when cost, consumption or both rise above defined thresholds so action can be taken. There are even applications that can model future energy requirements based on weather forecasts. This allows a building operator to plan an energy management strategy in advance if energy use is projected to exceed targets in coming days, such as when exceptionally high temperatures are likely. By providing tools like these to customers and helping them develop consumption management plans, the utility industry can ensure that the commercial sector achieves the benefits of smart meters. And demonstrating how smart meters can help a business increase its bottom line will squelch opposition.

Matt Kim is director of product management, solutions and technology for Prenova, a company that buys more than $2 billion in energy each year for dozens of brands, including Crate and Barrel, Dollar Tree, Costco and other national chains.


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Scott's Contracting
scottscontracting@gmail.com
http://www.stlouisrenewableenergy.com