Real-time or Smart electricity meters may help New England avoid blackouts during summers

Power Struggle
Real-time electricity meters may help New England avoid blackouts during summers
By Peter J. Howe, Globe Staff | April 17, 2006

New England may be just a couple of summers away from an electricity crisis that officials warn would be serious enough to force Third World-style rolling blackouts to stretch overtaxed electricity supplies.

But energy officials say New Englanders are showing little appetite for bringing new power supplies on line. There is resistance to building nuclear reactors and coal-burning power plants to make more electricity. Natural gas has grown far too expensive to rely on for more electricity generation. Canada has little spare power to sell. And plans for 130 wind turbines in Nantucket Sound are mired in controversy.

One of the few options left is a better kind of electricity meter.

Real-time or smart meters can tell millions of consumers what electricity actually costs in the wholesale market at any given moment, so they see a direct benefit from turning off the air conditioner, or waiting until the night to run the clothes dryer.

By giving people a powerful cost incentive for conserving electricity, the technology could stave off a crisis for years. And it could cost a tiny fraction of what new power plants and transmission lines would, officials say.

Technologies for introducing real-time electricity pricing to consumers range from high-tech, Internet-connected thermostats and meters to techniques as simple as sending e-mails and cellphone text messages telling people when they could save a lot of money by throttling back electricity consumption.

Over the course of a year in New England's competitive power markets, the price of a kilowatt-hour of electricity can range from 7 cents to $1, depending on whether it's a mild morning in spring when electricity demand is low or a scorching August afternoon when air conditioners and refrigerators are running full blast. (The average household uses about 750 kilowatt-hours of electricity monthly, and each kWh is equal to leaving 13 75-watt light bulbs on for a little over an hour.)

For years, a handful of huge industrial and commercial customers have been able to get real-time meters. NStar, which provides electricity in Boston and 80 suburbs, has about 100 large customers who pay fluctuating wholesale market rates every hour.

But today, almost all consumers pay their utility the same rate each hour regardless of what electricity actually costs. A nebulous sense of civic virtue -- not extra savings on the electricity bill -- is the only reward for homeowners who heed local power grid managers when they make their occasional summer-afternoon power-conservation appeals.

That's slowly beginning to change. Elsewhere in the country, a handful of utilities from New Jersey to Illinois to California have begun offering real-time meters to small residential and commercial customers. Last summer's energy bill is requiring more utilities to push ahead with real-time pricing plans covering more customers.

''That's where we need to go," said Gordon van Welie, chief executive of Independent System Operator New England, the Holyoke organization that runs the six-state power grid.

One quirk of the electricity market is that small reductions in demand during the dozen or so days every year when power demand spikes into potential crisis territory can have huge effects on costs. Like other markets, the price of electricity gradually climbs as demand rises. But at a certain point, after demand is equal to 90 or 95 percent of available capacity, the price suddenly spikes upward. Knocking a few percentage points off demand can send prices plunging.

Scores of businesses and government agencies across New England now participate in what are called demand-response programs, run by companies like EnerNOC of Boston. When power supplies grow tight, these organizations are paid cash bounties to conserve on power.

But van Welie said he thinks the future lies in spreading the burden more widely. ''There's a point with demand-response where you're hurting the economy. People want to be in business running their business, not shutting it down," van Welie said.

Compared to other parts of the country, business and industry represent a much smaller pool of potential savings in New England. The Midwest ISO, for example, which runs the grid for parts of 15 states and Manitoba, serves 3 million fewer people than New England's, but has four times the total electricity demand, reflecting what a vastly bigger industrial base the Midwest has. In New England, ''the bulk of the consumption is from a lot of consumers," van Welie said.

Most utility officials have come to think that while there may be a small number of technophiles who would love to have complex metering systems that show them the current price of electricity on a thermostat display or a cellphone-accessible website, the best thing is to keep it simple -- and cheap.

When California ran a test of a real-time pricing program in 2003-04 that involved about 1,400 households, one of the most successful innovations was imposing a ''critical peak" price, said Chuck Goldman, a researcher at the US Energy Department's Lawrence Livermore National Laboratory who has studied real-time prices. About 12 or 15 times a year, customers get an e-mail warning that during certain hours the next day, prices will have to jump to five to seven times their normal levels.

''It's tough to expose most customers to hourly prices all the time," Goldman said, but if a limited number of days a year consumers face ''trigger points," utilities can easily get enough people to moderate power usage to stave off market crises.

At NStar, executives are following real-time pricing projects elsewhere, including one beginning this summer at Public Service Electric and Gas Co. in New Jersey. But NStar is still skeptical about the cost-effectiveness of the technology. Noting that meters with real-time price capability can cost up to 15 times as much as the standard $50-to-$70 meter, NStar vice president of customer care Penni McLean-Conner said:

''To us, real-time pricing for residential customers is a very expensive technology. You have to make it simple enough and easy enough -- and inexpensive enough -- for people to save money."


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