Do we want “smart” utilities?

‘Smart’ Electric Utility Meters, Intended to Create Savings, Instead Prompt Revolt is a New York Times story that perhaps suggests a deeper truth: People don’t want their utilities to get smart on them. Except, occasionally, on request. Like, when a bill one month is strangely high.

These paragraphs encapsulate several problems at once:

At the urging of the state senator, Dean Florez, Democrat of Fresno and the chamber’s majority leader, and others, the California Public Utilities Commission is moving to bring in an outside auditor to determine whether the meters count usage properly.

In response to a wave of complaints from the Bakersfield area in the Central Valley, Pacific Gas & Electric has been placing full-page advertisements in newspapers in the area promising benefits from the new meters. It says customers will save money not only by paying rates based on hourly fluctuations in the wholesale market, but also eventually by displaying real-time rates.

To reduce their bills, customers could cut back at pricey peak times and shift some activities, like running a clothes dryer or a vacuum cleaner, to off-peak periods. Utilities will then have lower costs, the argument goes, because the grid will need fewer power plants as demand levels out.

Customers will become “structural winners,” said Andy Tang, senior director of the company’s Smart Energy Web program.

The first problem is that some customers (enough to cause a stink, and cause newspaper stories) think their new “smart” meters are cheating them. Let’s say the meters are fine. (And I’m betting they are.) What’s this say?

The second problem is that the meters complicate usage. Who (besides people paid to care) are interested in wholesale energy market price fluctuations? And how many customers are ready to modulate usage based on fluctuating real-time demand?

The third problem is cultural, normative, and to some degree explains the first two: We’re not used to caring about this kind of stuff. Much less about being “structural winners,” whatever those are.

What’s being called for here is not just new gear that helps users use less electricity, water and gas. And what’s proposed is not just the need for all of us to “go green” and care about wasting resources and cooking the planet. What’s proposed is re-conceiving what a utility is.

Utilities, at least to the end user, the final customer, the one paying the bills, are simple things. They are dumb. Their availabiliy is binary: it’s there or its not. When it is, you want to hold down costs, sure; but you expect it to be there full-time. There should be enough gas or oil to run a furnace, to boil an egg, to produce hot water. There should be enough electricity to light bulbs and keep appliances running. There should be enough water pressure for people to take showers and wash dishes. More than enough doesn’t get noticed. Less than enough is a problem. That or none requires a call to the utility company or the landlord.

“Smart” so far looks complicated. And most people don’t want complicated, especially from their utilities.

Now, what we’re talking about here is making all utilities digital. That is, computerized. Again, complicated. True, for a mostly good cause. But entirely good? I gotta wonder. When I see big companies like GE and IBM talking about making our power “smart,” I think they’re talking about making it smart their way. Which is not like other companies’ ways. And selling “solutions” to utility companies that are different than the next company’s “solutions,” and lock the customers into proprietary systems that can cause more annoyance than convenience down the road.

I haven’t studied any of this, so I don’t know. I’m just saying what I suspect. And I invite correction on the matter. If there are standard ways to smarten power, so that customers can swap out one company’s gear for another’s, that’s fine. But again, I dunno.

Meanwhile, let’s table that and look at the Internet. This is a place where we have a degree of intelligence in a utility. Customers in many places have choices about variables such as bandwidth, and “business” versus “home” levels of support.

But I think what we want out of the Internet is what we already have with water, gas and electricity: it’s just there. Nothing more complicated than that.

I hope that’s where we end up. But my fear is that old-fashioned utilities will get smart the way the phone and cable companies have made the Internet smart. And that would be dumb.

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25 Responses to Do we want “smart” utilities?

  1. If utilities could deliver plentiful power, reliably, cheaply and cleanly without getting “smart,” then there would be very little consumer interest in smart. The smarts are being added because our ability to deliver cheap, clean reliable power is running into limits that the smarts will help ameliorate over time.

    It’s little surprise that a lot of consumers are suspicious of “smart grid” types of initiatives. Things worked pretty well for consumers without them in the past.

    An energy future that faces constraints on carbon emissions, integration of distributed power generation (such as solar and wind), significant new loads (like plug-in electric vehicles) along with relentlessly rising baseline electricity demands, requires adaptation and innovation in the way that power is generated, transmitted and distributed.

    So while consumers may not want smart, smart is what they are going to need.

    I agree with you, though, that the quality of the average phone call I make today is well below that of calls I made in the 1960s and 1970s, when telephony was simpler.

    It seems inevitable that on the road to the smart grid, things are going to get more complex before they get simple again.

    Here’s some related reading, just FYI:

  2. Roland says:

    Electricity is different. It’s very difficult to store, and very expensive to meet peak load. Utilities need to give customers peak/offpeak pricing first, so we can voluntarily adjust our demand and/or put timers on things like water heaters. Start simple, with program expansion later. Whole-hog variable-rate arrangements are too much. And utility-controlled appliances won’t work without MUCH bigger incentives. The perception is that this isn’t in the customer’s interest, and anger against corporations is very high right now.

  3. Doc Searls says:

    There’s the right thing, then there’s what people will accept. What we’re talking about is something that is 100% out of the experience of customers for the last 100 years. Not easy.

  4. Esme Vos says:

    I posted a story about the Bakersfield incident a few weeks ago. The central problem is that people do not trust public utilities. People do not trust big institutions that are critical to their lives whether they are government entities, public transportation agencies, banks, insurance companies or pharmaceutical firms.

    When a mysterious new device called a smart meter enters the house and the owner suddenly sees an increase in his electric bill, he will accuse the utility of installing the meter to cheat him. The only thing that a utility can do to get people to accept these smart meters is something they are not used to doing: giving people information that is clear and easy to understand, helping them make the transition. They’re not used to this, no more than insurance companies or banks are used to helping people. The idea that they would have to win the people’s trust is totally alien to them.

  5. Paul Budde says:

    The problems with the current generation of smart meters is that they are not really smart. They basically provide a bit of tariff info that only a rather small % of people are interested in.

    In the State of Victoria here in Oz the Attorney General has send a strong message to the Government about these meters. Basically his message was that the costs of this ($2bn) will be borne by the users while they hardly get any benefits back for this.

    Smart meters without a smart grid is in my opinion rather useless. The only way in which I would except such a strategy is that these smart meters are IP based and will upgradable (through software) to true smart meters once the smart grid has been established that can handle this.

    True smart meters (as they will be rolled out in our $100 million smart grid/smart city project) will be energy management tools in the hands of the end users with a whole range of energy management applications. That is of course where the future of this industry is.

    Also where I live electricity prices will go up by more than 60% over the next three years, that will get a hell of a lot of people paying attention to this and start asking for ‘smarts’ that will allow them to manage their electricity more efficiently and start saving costs 🙂



  6. Doc Searls says:

    Thanks, Esme, Paul.

    Of course, you’re both right.

    My point was mostly about how people perceive utilities — and the steepness of the learning curve required to break free of those perceptions. It won’t be easy, either for the utilities, or for the customers.

  7. H.W. Duncan says:

    When I was Chief Engineer at 50,000 watt KAAY in Little Rock, we had 4 different rates: Summer and Winter “Normal” rates and Summer & Winter “Peak Demand” rates between 10 am and 3 pm. The electric meter wasn’t “smart,” but it did have a timer and peak detector that they read every month. IIRC the peak demand was calculated in 15-minute windows. We also received an across-the-board 15% rate decrease when the Arkansas Nuclear Project was online. So at least in Arkansas, industrial customers have been paying variable rates for at least 25 years.

    Entergy (formerly Arkansas Power & Light) also has a program for residential users that can delay the operation of selected air conditioning units for up to 15 minutes to allow load balancing.

    I suspect that the concept of limited electricity will become more common in the future as America slowly becomes a Third World Country.

  8. Patrick says:

    Another aspect of this sort of change is that people who really know stuff (smart folk) almost always suffer from the ‘when you have a hammer, everything looks like a nail” syndrome. They come up with complicated, when there may be a simple. In power buying, the use of simple feedback devices that change color when ones consumption rises or falls have been very successful at getting people to modify their behavior.
    A more direct and simple cue from the ‘smart’ meter may produce the result.
    Also, until regulations in every state make it possible for the user to sell power back (be a source as well as a consumer- sound familiar Doc?) the smart grid, and its meters. isn’t really about empowering customers.
    On the bigger scale, according to a McKinsey report ( 40% of targeted carbon emission reductions are net positive to the economy. Yet Congress does not start by legislating those.

  9. Why don’t these “smart” meters have an Ethernet port on them, so that devices can connect to them and use electricity when it’s cheapest? Why should I have to turn appliance X on or off depending on the price of electricity? That’s why everything I own has a computer in it. If they are so intelligent, why are they dumb (incommunicative)?

  10. I think part of the cultural problem is turning over to a third party decisions about when to save money or not. We continued to treat our electric bill as a month-to-month expense totally devoid of specific actions we take every single day, and as such, we’re not going to make those little changes that will add up to true savings down the road.

    Just imagine a truly smart meter that gave the decision making power to the most powerful processor in the home–the human brain. A small display you had on the desk wirelessly connected to the meter saying ‘this desktop is costing you X¢ per minute” and the “plasma TV is costing X¢ per minute” at current rates. Would people actually start to turn off the TV on their own, or turn down the AC if they knew exactly what it was costing per minute? If it said ‘this is costing you $1 per hour’ and they said “I’m going away for the weekend, maybe I should save $50” might that not lead to some savings (and a cultural sensitivity to electrical costs)?

    Let’s give the data to the end user in a more packaged and ‘real’ way so they can make the decisions to save money.

  11. Mike Warot says:

    Smart meters are intermediaries…. they need to go away.

  12. Jon Udell says:

    Let’s give the data to the end user in a more packaged and ‘real’ way so they can make the decisions to save money.

    Exactly. We have itemized phone bills but not electric bills. That’s nuts.

    As it turns out, the technology is available off-the-shelf in the UK but not the US. That’s nuts too.

  13. Ian Falconer says:

    Italy rolled out first generation smart meters a few years ago. Their primary reasons were to allow better better planning and drive down non-technical losses (fraud and theft), which is around 5% of total generated power in most developed countries.
    Italy found that they did not have to build an extra 3GW of generating capacity as a result of installing those meters and estimated a potential household saving of around $100 per yr. Italy’s meters were only semi-smart and not involved in real-time demand reduction, so were not very intrusive. They allowed better billing, remote metering and time-based tariffs. I agree with all of those and used to have a similar meter in a quarry that I used to run.

    That said I have serious reservations about the implementation of AMI (Automated Metering Infrastructure) proposed.

  14. Very thoughtful ideas and commentary. I see a common thread in all these comments and from my converstions with the utility company employees that install these devices, We have a long way to go.
    Most of the infrastructure to support the smart meter is in such disrepair it will not communicate to a central hub. The money spent is not enough to rejuvenate the grid and implement smart metering. In the end the customer always pays. Empowered or not, we are addicted to electricity.

  15. Harl Delos says:

    Many rural customers in Ohio – part of those whose electric co-ops own the Buckeye Electric generating company – have had radio-controlled switches on their water heaters for a couple of decades. It’s all voluntary, but if you have one, Buckeye Electric sends out a radio signal a few times a year, cutting power to your water heater for an hour or two.

    The cooperatives save a lot of money from peak-shaving, and I don’t know of any consumer, not one, who has noticed that it’s happened, unless they happened to be nearby and heard the “click”. Normally, you don’t need all your water heater’s supply of hot water except when you’re showering, and that typically doesn’t happen during peak electrical usage hours.

    There’s still plenty of hot water in the tank to use for fixing supper. The water heater recovers before bedtime baths.

    I want to unload the dryer and fold the clothes immediately when it stops running, so drying clothes in the middle of the night is not reasonable. And how would you limit dryer use from the *meter*, anyway?

    I think PG&E has something in mind like they’re doing at Buckeye Electric, and they’re just not explaining it very well. I’d be happy to put my water heater on such a switch, except that I no longer live in Ohio, and my new home has a gas water heater.

  16. Ric says:

    Where we want the smarts isn’t “in” the grid or utility, but at the ends. The other issue (I believe) around the PG&E meters is that the information wasn’t given to the consumer, but went back to the utility, so had no ‘real-time’ feedback to the consumer to suggest that they do something at a different time. I think that the consumer who got the data, and had some way of analysing it would find that a dumb utility with a smart meter at the end of it could be very useful in modifying consumption behaviour.

  17. Ric, that’s exactly what I suggest above. The problem isn’t in the devices — they’re all smart enough to moderate their use. The problem is that we don’t have an in-house network for devices to coordinate energy use versus price. Maybe there’s a standard or two, or three, but unless somebody knuckles down and implements it, all the compute power in the world, all the per-device-energy-measurement, all the demand pricing, all the real-time feedback is COMPLETELY USELESS.

    We need a way to get the spot price (maybe via the Internet), we need the power meter to sell us electricity at that price, and we need appliances to be able to fetch that price and decide whether to turn on or not, and we need the appliances to know how to cooperate with each other. E.g. the fridge and water heater shouldn’t be on at the same time — EVER.

  18. Doc Searls says:

    Great thread, all. Wish I had more time to jump in, but I don’t right now. But keep it up.

  19. I was thinking a bit more about this thread the other day while buying groceries. While trying to meet the twin goals of cutting my food bill and reducing my waistline, I set an overall goal of say ‘spending 10% less’ than I did or eating 10% fewer calories. These are overall goals that I work toward on a day to day or week to week basis.

    But when it gets down to actually working toward my goals, I have to go to the items themselves at a micro level to make real change. Does this can of soup have less calories than that one? Is this loaf of bread on sale instead of that one? How ridiculous is the calorie count in Hostess products? etc.

    I can’t do this with my power bill. Not only do I not have the specifics of each item, but I also have some external factors (namely the weather affecting the heat/ac usage) that makes month-by-month planning difficult without years worth of data on the effect of temperatures vs. my usage (and then I have issues like was I home that weekend, was it raining, etc).

    There simply isn’t the right data available to save energy well in the home.

    Which then got me thinking about starting a networked device company to answer that question, but that’s just the entrepreneur in me. 🙂

  20. quixote says:

    As Doc and many of the commenters have pointed out, it’s about control. Consumers don’t trust utilities because consumers have no control. The utility isn’t even giving them good information, to say nothing of easier control over usage or, better yet, buying power from consumers. The utilities are indeed not even trying to earn trust or be partners. Almost as if they didn’t think they had to bother with that….

    Add to that the important point that these smart meters may turn out to be smart mainly for corralling users into proprietary systems, and end users no longer look so set in their ways. More like once burned, twice shy.

  21. quixote: no, consumers have all the control. They can turn anything they want on or off. Utilities have practically zero control. All they can do is supply all the 110 to 120VAC that customers demand, … or supply none at all. If they supply much less voltage (a brownout), that can damage appliances, and it’s totally the power company’s fault. So undervoltage triggers blackouts.

    No, the problem is in the *measurement*, *communication*, and *coordination* of electricity use. If your appliances can’t communicate, they can’t coordinate, and they can’t share their measurements of their use.

    Powerline communication is expensive to do well (e.g. X-10 devices, which are inexpensive and work poorly in any non-trivial network). I suspect that a Zigbee (which is IEEE 802.15.4 plus meshing) network is the way to go in the short term. My house has over a mile of copper wire in it; probably a quarter of that controls the power flow. That’s gotta go. In the long term, a house needs to have a power bus, and a network (plastic optical fiber) connecting everything together. Any switch can control any light. The electric dryer asks other loads (water heater, fridge, freezer) if they can pause in their use; a gas dryer less so because it only runs a motor.

  22. I thought it would be a good idea to do this as a business–something that could measure the output of each device and report accordingly as to how much power it was using. There is a company in all this–something that could generate VC interest behind a green tech program. And I was right, but just a few months too late.

    Here is a good rundown of some new companies, many of them heavily backed by VCs or other major corporations, that are doing energy dashboard and home monitoring systems.

  23. RBM says:

    Following is one’s experience with some technical details.

    The Great Demand Meter Revolt is taking place in California.

    I lived with demand metering in New York City, in an industrial building operating a nursery. I used 4.5kw of lighting daily plus 5kw of refrigeration. The meter measured demand loading (amperes) in 30 minute increments; the greatest incremental load in any billing cycle was billed. Simply running equipment guaranteed very high electric bills; to cope with the demand cycle I used timers to operate refrigeration and amp- hungry equipment for 25 minute on- five minutes off during the day when current load was metered.

    Ordinary meters measure watts/hr without measuring current. Smart meters have remote features as well as the ability to measure ‘reverse flows’ but the problem is the demand metering.

    Just adding these meters without the equipment to manage current flows is simply taking customers’ money. The equipment necessary to manage current costs several thousand dollars as there is no ‘one size fits all’ approach. I used industrial current management equipment as I couldn’t tolerate breakdowns and had a difficult operating environment.

    This stuff isn’t cheap and installing it is not a do it yourself project.

  24. “SMART so far looks complicated. And most people don’t want complicated, especially from their utilities.” Right On! People aren’t stupid, just busy and overwhelmed. User-friendliness is great, but something new has to quickly make sense to consumers/customers.

  25. automation says:

    In every country there are different applicable regulations regarding the use and deployment. But the benefits and drawbacks remain the same.

    One environmental benefits of smart metering is the ability to give end users a direct feedback on the current consumption of the measured medium. Through this direct confrontation, he can draw conclusions about his current behavior. The easier he can make through the information given him a connection to its concrete actions, the easier it is to him his behavior in a particular direction to change. This mechanism – information, action, feedback – is a critical component of the learning process, one end-user potential.

    In a study of electricity consumption by households was only the fact that the daily consumption of the residents were told to savings from an average of 10.5%. In the course of Smart1 project in Melbourne, for example, could be reduced through the use of a smart meter of water in the shower-equipped households, an average of 15%.

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