Issue Brief #1 - August 2009: Smart Meters & Smart Pricing
Smart Meters and Smart Pricing: A Win-Win for Communities & Consumers
One of the most important building blocks of a smart grid — and one of President Obama’s strategies to jumpstart the economy — is implementation of advanced metering infrastructure (AMI), commonly known as “smart meters” in homes and businesses across the country. With a tough economy hitting policymakers’ budgets, as well as consumers’ wallets, smart meters are one of the quickest investments in smart grid technology. Smart meters differ from conventional electricity meters, because they allow for two-way electronic communication in which valuable information flows dynamically between consumers and electricity producers.
Smart meters allow utilities to identify and respond to outages more quickly, as well as save the labor costs associated with manually maintaining conventional meters. However, very few utilities now providing smart meters to their retail customers are also allowing two-way communication for consumers to see the actual cost of power via price signals, called “time-of-use” or “real-time pricing.” By combining smart pricing with advanced metering, the “iron curtain” now blocking consumer access to the information needed to effectively and efficiently control their electricity use will be removed. With smart meter access to price signals, consumers can automatically monitor electricity prices as the cost of electricity varies dramatically throughout the day. They can pay less accordingly, rather than paying an average price projected by electricity producers. As technology advances, smart meters, in conjunction with pricing information, can act as a portal communicating with smart appliances and technology. As more consumers generate their own power, they will have the ability to sell power back to the grid when the prices are right.
