States ask: Will Smart Meters save money or reduce CO2?

In 2008, a report was prepared for the New Jersey Department of Public Advocate, Division of Rate Counsel, entitled “Advanced Metering Infrastructure – Implications for Residential Customers in New Jersey”.

It concluded:

Savings to ratepayers. The estimates of savings to residential customers from AMI-enabled dynamic pricing, a form of time-differentiated pricing, hinge upon three major assumptions:

• the reduction in peak use per participating customer,

• the percentage of customers who will voluntarily participate, and

• the long-term persistence of the reductions per participating customer.

There is considerable uncertainty regarding each of these assumptions despite the results from pilot projects in other jurisdictions. First, most pilots entice customers to participate through some form of “appreciation” payment and therefore provide no guidance regarding the percentage of customers who will voluntarily participate in the absence of such an incentive. Second, most pilots have only operated a few years, thus they provide little guidance regarding the long-term persistence of participation and reductions per participant.

It also concluded:

…reductions from dynamic pricing will not lead to significant reductions in annual emissions of carbon dioxide and sulfur dioxide which are a function of annual electricity use.

Report prepared by Synapse Energy Economics, Inc.,
July 8, 2008
Original link:  http://www.state.nj.us/publicadvocate/utility/docs/AMI_White_Paper-_final.pdf
The full report is here.

Not considered in the report is the increased energy use due to the Smart Meter wireless networks and infrastructure, as well as the data storage requirements. That will mean a net increase in CO2 due to the Smart Meter and Smart Grid program.

In February 2011, Connecticut Attorney General George Jepson sent out a press release:

Connecticut Light & Power Co.’s plan to replace existing electric meters with advanced technology would be very expensive and would not save enough electricity for its 1.2 million customers to justify the expense, Attorney General George Jepsen said Tuesday.

Jepsen made the comments in a brief filed Tuesday with the state Department of Public Utility Control, which is reviewing CL&P’s request to replace all existing meters with “advanced meter infrastructure.” The company also asked regulators to guarantee that the company will be allowed to recover its full cost of installation before the department actually evaluates what the costs actually were and whether those costs were reasonable.

“CL&P’s proposal would force the company’s ratepayers to spend at least $500 million on new meters that are likely to provide few benefits in return,” Jepsen said. He urged the regulators to “continue to evaluate emerging meter system technologies as well as other conservation programs” and only approve installation of the advanced meters when they are cost effective.

“The pilot results showed no beneficial impact on total energy usage,” Jepsen said. “And, the savings that were seen in the pilot were limited to certain types of customers and would be far outweighed by the cost of installing the new meter systems,” he said.
www.ct.gov/ag/lib/ag/press_releases/2011/020811clpmeters.pdf

Michigan Attorney General Bill Schuette had this to say in April 2012 –

 …at least two very substantial issues remain that must be further addressed before the MPSC (Michigan Public Service Commission) authorizes or approves any further deployment of smart meters by Michigan electric utilities and the recovery from ratepayers of the costs of smart meter deployment. First, there must be a sufficient demonstration that implementation of the smart meter programs will actually produce a net economic benefit to customers. Second, customers must be afforded a meaningful and fair opportunity to opt out of smart meter installation without being penalized by unwarranted and excessive costs.

A net economic benefit to electric utility ratepayers from Detroit Edison’s and Consumers smart meter programs has yet to be established. In the absence of such demonstrated benefit, the Attorney General has opposed, and will oppose any Commission action that unjustly and unreasonably imposes the costs of such programs upon ratepayers. To a significant extent, the asserted potential benefits to utility customers depend upon assumptions that a customer will consider additional “real time” data on electricity usage provided by smart meters, and adjust their electrical consumption to achieve cost savings under variable pricing programs that do not yet exist. (See Edison, Document No. 0146, p 5; and Consumers, Document No. 0148, pp. 6-7). Any assumption that large numbers of residential customers will have the time, ability and motivation to attend to, and act upon daily or even hourly changes in their electrical is questionable.
Comments, Michigan Public Service Commission Case No. U-17000, p. 3-4

What the record does reveal is that AMI is a pilot program that even Robert Ozar, Manager of the Energy Efficiency Section in the Electric Reliability Division of the PSC, concedes “is as yet commercially untested and highly capital intensive, resulting in the potential for significant economic risk and substantial rate impact.” At best, the actual evidence presented by Detroit Edison to support the rate increase was aspirational testimony describing the AMI program in optimistic, but speculative terms. What the record sadly lacks is a discussion of competing considerations regarding the program or the necessity of the program and its costs as related to any net benefit to customers.
Michigan Court of Appeals Nos. 296374, 296379, slip opinion, pp. 7-9, April 10, 2012
Cited in Attorney General Comments, Case No. U-17000, p. 4-5

 

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