Smart meters give utilities the ability to vary the price of electricity throughout the day—higher prices at peak hours, for example—giving consumers incentives to save more money and therefore more energy. DTE Energy, a utility provider serving homes in Michigan, began experimenting with the smart technology by installing it in the homes and businesses of approximately 1.1 million customers and offering this ‘Dynamic Peak pricing’ to 1,600 customer-volunteers:
- Peak: Mondays through Fridays, 3 to 7 p.m., 12 cents per kilowatt hour
- Mid-peak: Mondays through Fridays, 7 a.m. to 3 p.m. and 7 to 11 p.m., 7 cents per kWh
- Off-peak: 11 p.m. to 7 a.m., all day Saturdays, Sundays and designated holidays, 4 cents per kWh
- Critical peak event: (implemented at extremely heavy-use times after a warning from DTE), $1 per kWh
Normally, customers pay 6.9 cents per kWh for the first 17 kWh per day, and 8.2 cents after that, as well as a 4.2 cent per kWh distribution charge. According to DTE spokesman Scott Simons, the results have been favorable, with customers choosing to use energy more sustainably by running the dishwasher or washing machines late at night, for example. Most customers took it as a challenge to see how much they could reduce their bill.
Director of Energy Services at the Iowa Association of Municipal Utilities, Anne Kimber, said utilities usually pay much higher wholesale prices during the day than at night so the time-of-use pricing more closely reflects their cost.
Although many midwestern utilities are interested in implementing these types of programs, John Finnegan of the Environmental Defense Fund said it is still unclear just how much these smart meters will change energy use. He has a different, more ‘carefree’, vision. “It’s not something you would consciously do,” he said, suggesting a smart power system would automatically minimize power consumption for the customer, who would provide the utility a profile of the household’s typical use. Although it’s taking longer than some people expected, Mr. Finnegan believes this type of technology is not far behind.
Source: Will smart meters change consumer habits? Early indicators say yes, Midwest Energy News