Post # 42 - Smart Meters in the Nation's Capital

(UPDATED, 10/23/10) The recently issued final report of a smart meter pilot in Washington, D.C. concludes that residential consumers in the nation’s capital consistently respond to variable electricity prices. But, at the same, a consumer watchdog agency in D.C. worries that a impending smart meter roll out is happening without the necessary consumer education.

The project, PowerCentsDC, ran from about mid-July, 2008 through October 2009, and involved approximate 900 D.C. customers of Potomac Electric and Gas Company – or Pepco – the utility service which delivers electricity to 778,000 homes and businesses in the District of Columbia and its Maryland suburbs. Project participants – who lived in all areas of the city, including low-income neighborhoods – received a smart meter, a smart thermostat (if desired and the residence qualified), and new energy price plans that allow savings for customers who reduce consumption during hours when wholesale electricity prices are high.

In fact, PowerCentsDC was the first pilot in the nation to test smart meters with three different pricing plans. Most participants chose a plan in which customers were charged five times the average price during "critical peak pricing" events, which occurred about 60 hours per year, and offered a slightly reduced rate for the remainder of the year. The second plan was an hourly pricing option that offered peak versus off-peak pricing based on the time of the day electricity was used. The third plan offered rebates to customers who voluntarily curbed their electricity use during peak events. For all three plans, consumers could choose to allow their smart meters to automatically adjust a home's electricity use when notified of a peak event. Consumers were able to find out ahead of time when peak hours might occur via an automated phone message, e-mail, or text, and choose to reduce consumption during those hours. Participants also received a chart illustrating their usage habits with each monthly electricity bill.

The pilot program’s final report, issued early last month, finds that most customers with access to smart meters reduced overall electricity use when presented with their habits and a financial incentive to save. Most would also rather curb usage or face high premiums a few times a year during extreme peak events than worry about keeping track of daily peak and off-peak usage hours. So-called peak reductions in summer were greater than those in winter and most of those peak summer events occurred when daily temperatures rose (according to the report, the fact that summer peak reductions were greater than winter “impl[ies] more discretionary load").

When asked to name the methods they used to reduce consumption during peak events, 60 percent of participants said turning off appliances, while 59 percent said they adjusted the air-conditioning. Only 25 percent said they adjusted their heating system (although it should be noted that 54 percent of the participants had a heating system powered by natural gas).

The results also indicate that people may be more willing to curb electricity use, or face paying an extremely hefty surcharge during peak events a few times a year, rather than curbing electricity on a daily basis during specified peak hours.

Perhaps most important for smart grid proponents, the report found that more than 90 percent of all PowerCentsDC participants ended up saving on their Pepco electricity bills, compared to non-smart meter customers. Further, 93 percent of participants said they preferred using a smart meter and a peak rate system than Pepco's current rate plan.

The PowerCentsDC report thus appears to bode will for Pepco’s D.C.-wide installation of smart meters, which is scheduled to begin this week. But at least on local agency is concerned that things may not be ready for prime-time.

On September 27, 2010, D.C.’s Office of the People's Counsel – an independent agency within the D.C. government charged with advocacy on behalf of consumers of natural gas, electric and telephone services in the Nation’s capital – filed a petition with the D.C. Public Service Commission seeking to suspend the smart meter rollout until the Pepco does more to educate consumers about the program.

The petition is noteworthy because along, with Pepco, the D.C. Peoples Counsel was a sponsor of PowerCentsDC and is not a smart grid opponent. Thus, on the one hand, the D.C. Peoples Counsel supports smart meters to the extent that the technology “empowers consumers to reduce their electric consumption, supports energy efficiency, reduces the District of Columbia's overall electric load capacity, and does not impose a financial burden on seniors, those on fixed incomes and lower income electric utility consumers.”

At the same time, the D.C. Peoples Counsel expresses concern about what it terms Pepco’s “lack of early consumer education about how the smart grid will be deployed, the benefits consumer can expect in the short term as well as any alerting them to potential problems that may occur.” The D.C. Peoples Counsel argues that “the ultimate success of the program is inextricably linked to comprehensive customer education on the front end.”

In a response filed filed with the Public Service Commission on October 1, 2010, Pepco argues that the Peoples Counsel's petition is premature. Noting the success of the PowerCentsDC pilot (and what Pepco describes as successful advance notifications to the project participants), the utility notes that its deployment of new meters commencing on October 4th "is, for now, no more than the exchange of old meters for new ones." The utility asserts that, since none of the "smart" capabilities of the meters will be activated at this time, "it would be imprudent to prematurely promote the advanced features that are not yet available." At the same time, Pepco states that customers are being notified in advance with a letter and fact-sheet. Moreover, "Pepco will interface customers at various community events, train [Peoples Counsel] and Commission staff to respond to Smart Meter questions, and provide educational materials through direct mail, the Pepco website, and various media outlets."

In an October 22, 2010 order, the Public Service Commission denied the Peoples Counsel's petition. The D.C. PSC stated that the D.C. City Counsel already had authorized Pepco's implementation once the company had established sufficient funding -- which it had, from a Depart of Energy stimulus grant. Further, the PSC noted that it already had granted a request by the Peoples Counsel to establish a collaborative Advance Metering Infrastructure (AMI) Consumer Education Task Force to develop a comprehensive educational program to educate D.C. consumers on smart meter implementation. While denying the Peoples Counsel's petition, the PSC directed the AMI Consumer Education Task Force to continue its efforts and to address any problems that may develop among stakeholders.