Smarter houses, smarter renters
Just as the march of civilization has always been coldward and stormward, so too is the inexorable march of markets information-wards and choice-wards, as illustrated by this Washington Post article:
Pepco Holdings Inc. is planning to install “smart meters” in 2,250 District homes as part of a $2 million pilot project to give Pepco more information about residential electricity usage and give homeowners greater ability to manage power consumption and curb monthly bills.
Utilities — heat, hot water, electric, and cooking (gas or electric) — are most properties’ biggest direct operating expense, so cost savings are well worth pursuing, in any of several ways:
1. Energy conservation. These cut the therms required to heat a home. Higher R-factor insulation and thermopane windows (and window enclosures).
Since 1959!
Cost savings and consumption management are especially important for electricity, which has wildly volatile pricing:
The price of electricity can vary widely depending on time of day and season.
Summer rates at peak hours are 64 cents a kilowatt-hour; rates during non-peak hours are 6.81 cents.
Ten times difference in rate!
Pepco would also have the ability to adjust the thermostats to prevent demand from overloading the transmission system. There are 15 “critical peak” days during the summer and three during the winter. Customers would be able to override Pepco’s adjustments.
Note that last phrase: it’s all about enhancing customer choice by providing information and not removing the customer’s ability to act independently.
2. Demand management. These lower a resident’s rate of consumption. By now low-flow toilets and shower heads are standard; so are setback thermostats (or timers).
You know, that’s a bit intimate for a G-rated blog
Though useful, these efforts are largely passive; they do nothing to enlist the resident in the effort to contain utility costs. A more active approach is:
3. Individual metering. Separate meters are installed for each apartment, and each resident family is directly billed for its household usage.
Metering is a cost-transfer device: it shifts the payment burden to the resident, so now it is the owner who no longer cares whether the windows are left wide open with the air conditioner running at full blast.
“As energy prices go up, customers want more control over their electric bills,” said Michael J. Sullivan, Pepco’s vice president of customer care. “How can they get that control? One way is to involve them in direct control over their electrical appliances.”
We’d have more success controlling this sort of thing if he could read.
But direct metering is intrusive: many old buildings have such a strong internal skeleton the cost to meter can run to $2,500 per apartment or more. With the advent of computers and the internet has come a more sophisticated, more active version:
4. Submetering. Instead of flow meters, sensors are installed all along the wires (or pipes), collecting monthly information that enables the property owner to break down the aggregate consumption into each household’s fraction. Although the measurement is indirect, most states have now accepted that submetering is equitable and legal.
Both metering and submetering pay for themselves: usage typically drops 20-30% if residents are charged for their use.
The meters will measure customers’ electricity use at 15-minute intervals and transmit the data to Pepco through a wireless communications link. Customers will get more detailed bills.
About half the residences in the program will also get “smart thermostats” that will provide customers with information about real-time electricity prices and running usage so they can adjust air conditioning or the use of other appliances.
Amazingly, people’s consumption typically goes down when they can see their usage, even if they’re not paying for it.
Pepco said it will select the homes for the pilot project at random in all eight wards of the city and will install the new meters at no charge.
Eliminate the cost barrier to innovation.
The utility will experiment with different approaches to the smart meters:
1. Give households information a day ahead about hourly pricing in the wholesale market for the regional power grid.
2. Give customers advance information about four peak hours on “critical peak” days either through the smart thermostats or by automated phone messages.
3. Offer customers rebates for reducing consumption during those peak hours.
How many experiments are we trying?
This is a worthy effort; experiment to discover how to improve customer satisfaction by managing demand, and making the customer a partner.
Phil Franklin, director of business development at Advanced Metering Data Systems LLC, the maker of the meter communications system, said that the devices have been installed in 50,000 homes in Birmingham, Ala., and that there are pilot projects in Gulfport, Miss.; Charlotte; New Orleans; Covington, La.; Jasper, Ga.; and two towns in Ontario.
A real-time network also creates robustness, as repair feedback is improved:
Cost savings also occur in another way:
The new meters also mean that utilities would not have to send people out to read meters.
When it gets dark I run your meter faster.
