POWER: Utilities set to begin 'smart' metering

By CHRIS BAGLEY - Staff Writer | Saturday, April 19, 2008 10:41 PM PDT ∞

Utility companies are preparing to refit 7 million Southern California homes with high-tech meters over the next couple of years, the first step in a plan to shift electricity use away from hot summer afternoons when the region's grid labors under a growing population, larger houses and larger television screens.

The electric meters to be installed by San Diego Gas & Electric Co. and Southern California Edison are similar to existing meters in size and shape but have digital displays in place of the current dials. The cost of the meters will not show up as additional charges on ratepayer bills, according to the company.

A radio transmitter in each device is designed to send information about hourly usage to the utility. Representatives of the San Diego utility say the transmitter could eventually allow customers to have home appliances automatically shut down under guidelines they have set up in advance.

Following a trial run in one San Diego neighborhood this summer, the company plans to swap out its 1.4 million existing electric meters between November 2008 and early 2011. SDG&E says it plans to install similar monitors and transmitters on its 900,000 gas meters on a similar schedule.

In the second phase, the new rate structures would be introduced in 2009 and 2010. Under one plan already approved by the California Public Utilities Commission, the San Diego utility would offer rebates of 75 cents and $1.25 per kilowatt-hour to customers who reduce their peak-time usage from earlier periods. A rate structure now before the commission includes both lower rates for off-peak hours and sharply higher rates for afternoon use.

'Vegas syndrome'

One key impetus for the plans is the wide variation in the cost of producing electricity, according to the utility companies and the state commission. Rising use at peak times, when air conditioners are switching on by the hundreds of thousands, requires a series of smaller, less-efficient power plants to start up.

Special rate structures for some factories and other large commercial customers reflect the hour-to-hour variation, according to people in the industry, but retail rates for homes and small businesses don't. Power companies generally earn greater profit for electricity produced in the mornings and evenings, and little or no profit for what they produce when the "peaker" plants are running.

Ted Reguly, who manages the San Diego utility's "Smart Meter" program, said the current rate structure obscures the actual costs of electrical production and can keep homeowners from conserving at the most important times.

"I call it 'the Vegas syndrome,' " Reguly said. "You go into a casino and they take away the time of day and give you chips. They take away the price signals. We're ... trying to give customers better information about what is the true cost of the commodity."

A leading consumer advocate agreed but also sounded a skeptical note, saying that it isn't yet clear exactly how residents will respond to the particular rate structures or whether they'll make the changes necessary to save money.

Representatives of SDG&E and Edison, which plans to install 5.3 million new electrical meters in the next four years, said even residents who agree to higher afternoon rates are still likely to save money because of the lower morning and evening rates.

An Edison representative said its SmartConnect program will allow many of those customers to save even more than those whose rate structures include only peak-time rebates.

A complex process

The San Diego utility is planning a trial run in May, June and July with 5,000 homes in the Tierrasanta community. Other areas of the county are scheduled to get the new meters in November, with the entire county completed by mid-2011, Reguly said. About 300 "smart" meters installed for early testing in Fallbrook will be replaced along with nearby analog meters, a spokeswoman said.

Edison representatives said they'll install the meters first in areas that have adequate cellular phone coverage because many of the neighborhoods will communicate with the utility through nodes on cell towers. Other factors could include local temperatures, since hotter areas tend to have heavier electricity use and thus more room to conserve, utility representatives said.

An SDG&E spokeswoman said the installations will depend on the particular routes of its 200 meter readers. Neither company has released details of its installation schedule.

At the commission's behest, both companies have already attempted to smooth the daily power curve in various ways. The utilities, for example, offer rebates to residential customers who agree to have their air conditioners switched off automatically when the grid is under particular strain. Five percent to 10 percent of residential customers have participated in recent years, according to the companies.

A 2005 directive from the utilities commission supports the "smart" meters and the new pricing structures. The commission approved the San Diego utility's meters last April.

Michael Shames, executive director of the Utility Consumers' Action Network, which advised the utilities commission on its handling of the utilities' plans, praised the new meters as having the potential to save customers money. The San Diego-based group is frequently critical of gas, oil and utility companies.

Return on investment

But Shames also noted the magnitude of the huge upfront costs; San Diego Gas & Electric, for example, said its "Smart Meter" program is costing $572 million. The utility estimates the monthly costs at $1.50 to $2.50 per meter over the first half-dozen years, roughly offsetting its savings in eliminating 200 meter-reading routes. A spokeswoman said the company is reassigning all of the meter readers within the company.

"Smart Meters are only as good as the proposed rate structures," Shames wrote in a recent e-mail. "If the rate structures are fair and don't penalize customers who can't change their consumption, then the meters could be a good thing for residential customers. If the rate structures are unfair or don't give sufficient ... rewards to customers who make the effort to change their electric usage then the meters could well be a waste."

Still, Shames said, the meters could be particularly helpful in buildings with solar panels installed on roofs, which earn bill credits for the electricity they feed into the grid. Those home- and business owners are able to sell excess power on hot days back to the utility in the form of "negawatts."

The commission argued in 2005 that peak conservation was necessary to cope with the current limits of generating capacity in California.

In order to keep up with the rising and widening "peaks" in daily demands for electricity, power companies are continuing to apply for new plants. In some cases, the plans have provoked anger.

A large plant proposed in Imperial County would require high-voltage cables to be strung across North County's backcountry. Residents of Santa Ysabel and surrounding areas warn that the project, dubbed "Sunrise Powerlink," will mar views and potentially increase the risk of catastrophic wildfires.

SDG&E spokeswoman Stephanie Donovan said the new meters and the associated programs are needed to help keep a growing population from averting a power crisis ---- but that alone won't do it, she added. The project's new generating capacity and several other conservation measures are necessary, she said.

Contact staff writer Chris Bagley at (760) 740-5444 or cbagley@nctimes.com.