I would ask consumers this question: Do you want to adjust your energy usage based on your monthly bill, then wait until the next month to see if what you did had any effect? Wouldn’t you rather know that your TV converter box uses twice as much electricity as your refrigerator and that, even though appliances are turned off and cell phones disconnected from their chargers, those outlets are still using electricity? Rather than having to call when your power is out, wouldn’t you like the utility to know who is out so that they can respond more quickly?
Customers can now see on-line what their bank account contains and make adjustments without having to wait until they get the monthly statement in the mail. Wouldn’t that also make sense for your electricity account? Perhaps you could even automate your energy use preferences based on utility prices.
Let me pile on here: wouldn’t a lot of us be better off (higher individual utility) if we could choose from among these various value propositions? Haven’t we had more and more such valuable options available to us in other industries over the past two decades due to business innovation around technological change?
Hamilton was writing in response to “Smart Meter, Dumb Idea?” by Rebecca Smith in the Wall Street Journal. In this article Ms. Smith spends almost no time discussing the variety of ways that smart meters can enable new products and services, including new products and services that would reduce energy use and save consumers money. For example, she devotes all of one paragraph to a cursory mention of how California policymakers see smart meters as a means of enabling consumers to choose dynamic pricing. I’m disappointed to see yet another article from Ms. Smith that demonstrates her failure of imagination with respect to how we could innovate around a smart grid platform.
However, her utility-centric perspective does provide a cautionary note as we move forward with smart grid policy and the crucial regulatory reform that must accompany it. If we think of the scope of smart grid investments as being focused on utility benefits, reducing the cost of providing customers with the same plain-vanilla electricity product that we’ve been getting for a century, then she may very well be right. If we do that, we truncate the consumer-facing product and service innovation that would be the source of real benefits (and that I’ve been talking about at KP for years).
Smart meters provide a platform for retail service innovation … but existing regulatory institutions and a mindset that cannot imagine those possibilities can stifle those benefits.