The Benefits of Smart Meters

The California Public Utilities Commission (CPUC) has authorized the state’s investor owned utilities to replace conventional customer meters with Smart Meters in order to give consumers greater control over their energy use. Smart Meters enable a utility to provide customers with detailed information about their energy usage at different times of the day, which in turn enables customers to manage their energy use more proactively. 

Smart Meters are being rolled out nationwide and internationally. According to the Edison Foundation, more than 8 million Smart Meters have been deployed by electric utilities in the U.S. and nearly 60 million should be in place by 2020. In California, the CPUC authorized Southern California Edison to install approximately 5.3 million new Smart Meters, San Diego Gas and Electric Company (SDG&E) 1.4 million electric Smart Meters and 900,000 natural gas meters, and Pacific Gas and Electric Company (PG&E) approximately 5 million electric meters and 4.2 million natural gas meters.  

The benefits of Smart Meters to customers, the state, and utilities, include: 

  • Allows for faster outage detection and restoration of service by a utility when an outage occurs and therefore, less disruption to a customer’s home or business.  
  • Provides customers with greater control over their electricity use when coupled with time-based rates, increasing the range of different pricing plans available to customers and giving them more choice in managing their electricity consumption and bills.  
    • Smart Meters enable a utility to measure a customer’s electricity usage in hourly increments.  
    • If a customer elects to participate in time-based rates offered by the utility, they have the opportunity to lower their electricity demand during “peak” periods (the peak period for most utilities are summer afternoons) and potentially save money on their monthly electric bill. 
  • Allows customers to make informed decisions by providing highly detailed information about electricity usage and costs. Armed with a better understanding of their energy use, consumers can make informed decisions on how to optimize their electricity consumption and reduce their bills.  
    • Customers with Smart Meters today can access their prior day’s electricity usage through their utility’s website.  
    • In the near future, by installing an in-home display device that communicates wirelessly with a Smart Meter, a customer could monitor their electricity usage and costs in real-time (similar to the price and quantity displays on a gas pump), allowing them to adjust their usage instantaneously in response to changes in prices or system reliability events, for example by delaying the use of ahigh-energy appliance or shutting it off. This could be done manually or automatically by pre-programming the device or appliance.  
    • In the near future, it may be possible for a customer to receive automatic alerts (via emails or text messages) to notify them of when the electricity consumption exceeds a pre-determined threshold. 
  • Helps the environment by reducing the need to build power plants, or avoiding the use of older, less efficient power plants as customers lower their electric demand.  
    • This is beneficial for all utility customers because the costs of building new power plants or relying on older, less-efficient power plants are eventually passed on to customers in retail rates.  
    •  Building power plants that are necessary only for occasional peak demand is very expensive. A more economical approach is to enable customers to reduce their demand through time-based rates or other incentive programs.  
    • When the utilities avoid the use of “peaker” plants to meet high demand, the environment benefits because peaker plants typically have higher greenhouse gas and other air emissions. 
  • Increases privacy because electricity usage information can be relayed automatically to the utility for billing purposes without on-site visits by a utility to check the meter. This also results in lower operational costs for the utility, which means savings for customers as utility rates reflect the utility’s cost to operate. In addition, as technology improves and changes over time, customers can receive the benefit of those changes without the utility having to replace the meter itself.  
  • Smart Meters are the first step toward creating a Smart Grid in California. With a Smart Grid, digital technologies are applied to every aspect of the industry, from generation, to transmission, to distribution, to the customer interface. This will help the grid sense what is happening to the energy flow, keep it in balance, and improve reliability and make the grid more resilient in the face of outages and other problems. 

Utility Smart Meters and Rates

Pacific Gas and Electric Company: Time-based rates are available to PG&E’s residential, agricultural, and commercial and industrial customers with a Smart Meter. 

On February 25, 2010, the CPUC adopted new rate structures for commercial, industrial, and agricultural customers of PG&E as part of an effort to implement dynamic electricity prices for all California consumers. These rates are designed to reflect the cost of electricity production during periods of high demand. When combined with PG&E’s Smart Meters, these rates will provide an opportunity for customers to lower their bills while improving system reliability and reducing greenhouse gas emissions.  

Beginning on May 1, 2010, large commercial and industrial customers will be placed on new Peak Day Pricing rates. Customers on these rates will pay different prices for electricity depending on the time of day. On the few hottest days of the year, prices for electricity used between 2 p.m. and 6 p.m. will increase further. However, PG&E will notify customers about these peak days one day in advance, so customers can plan accordingly. Beginning on November 1, 2011, medium and small commercial and industrial customers will begin moving to new Peak Day Pricing rates.  

Residential customers may elect to enroll in PG&E’s Smart Rate program, which is designed to encourage customers to reduce their electricity usage at during peak periods. Participants in Smart Rate may also elect a bill protection option for the first full summer of participation.  

Residential and small business customers can also enroll in PG&E’s Smart AC program, where they can reduce or shift their air conditioning in response to signals from the utility. In the near future, residential customers will have the option of enrolling in a Peak Time Rebate program, where they can receive a rebate for reducing their electricity consumption in response to demand response signals from the utility. 

Southern California Edison: Edison customers with Smart Connect meters will be able to participate in time-based rates. 

Edison will specifically implement a new Critical Peak Pricing (CPP) program for its large commercial and industrial customers starting in 2010 and is expected to expand CPP to medium commercial customers and agricultural customers by 2012. Additionally Edison will implement a voluntary real-time pricing rate (for all customers) by 2012 as well.  

Finally, residential customers (with Smart Connect meters) in Edison’s territory will also be able to participate in a Peak Time Rebate program. This program is anticipated to begin in late 2010. Alternatively residential customers in Edison’s territory (with Smart Connect meters) will be able to voluntarily enroll in CPP by 2012. 

San Diego Gas and Electric Company: SDG&E implemented Critical Peak Pricing for large and medium size commercial and industrial customers in 2008.  

For residential customers with Smart Meters, SDG&E will offer a Peak Time Rebate program by 2011.