The Cutting Edge: COMPUTING / TECHNOLOGY / INNOVATION : Tapping Into Technology in Hopes of Making Electricity Cheaper : Energy: New usage-measuring meters and deregulated systems are part of a PUC effort to achieve lower rates.
It will take a wide range of innovations, from new electric meter technologies to radically different marketing systems, but within the next few years many California electricity customers should be getting the opportunity to help lower their power bills.
It’s all part of a complex effort by the state Public Utilities Commission to deregulate the state’s investor-owned electric utilities, with the aim of cutting rates that are on average 50% higher than in the rest of the country.
The PUC released rival draft proposals for a deregulated electricity market on May 24, and it expects to decide on a final proposal later this year. But many of the components that will be a part of any final plan are already clear, and all the big players in the state’s electric power industry will be attending a meeting Thursday in Marina del Rey to work on the nuts and bolts.
One innovation will be the creation of an independent operating agency--not controlled by the utilities or other power generators--that will direct the flow of power, much as air traffic controllers direct aircraft. In the case of electricity, this is meant to ensure equal access for competing power plants to the big transmission wires of the interconnected power grid--which is now owned and controlled by the utilities.
Impartial access will allow competition based on the price of electricity, without anyone’s gaining an advantage by dint of ownership of the electron superhighway.
“This has great potential for transforming the industry, but is widely overlooked,” says Ralph Cavanagh, energy program director for the Natural Resources Defense Council, an environmental group. With computers to shunt the power to and fro, the logistics are not complicated.
“It is breathtakingly simple,” Cavanagh says. “You could probably do it from your bedroom.”
Another key addition will almost certainly be special meters for customers.
The commission believes that competition will be greatly abetted if consumers are aware of the actual cost involved in producing electricity, as opposed to the mishmash of regulated charges they now pay on their utility bills. The aim is to “demystify the price for generating electricity,” as the majority proposal describes it, mainly via a device known as a time-of-use meter.
The typical residential electricity meter simply gives a running total of the kilowatts of power used every month. This works well enough in the current system because almost all electricity customers are charged a flat rate, day or night. In truth, though, it typically costs more to produce electricity during the peak usage hours of 2 to 6 p.m., because more expensive sources of power must be tapped to meet the high demand.
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Under deregulation, a time-of-use meter will tell customers how much power they are using each 15 minutes, half-hour, or other specified period of time during the day. Utilities would then offer rates that change over the course of the day--depending on the cost of generating the power at that moment--allowing customers to lower their power bills in various ways.
A homeowner might cut costs by programming a “smart” time-of-use meter to turn off the air conditioner when power prices soar and to turn it back on when they drop. Southern California Edison Co. is experimenting with the idea now with 50 households in Palm Springs and Orange County.
A big industrial power user, guided by trends in the changing price of power, could shop for the best deal available in bulk electricity--from a generator just down the road, or from a power plant next to a Wyoming coal mine. Such deals would probably include restrictions about how much electricity could be used in which time period--again, measured by time-of-use meters.
These deals could be tailor-made contracts negotiated directly between the power plant and large industrial customers, or between power plants and brokers representing neighborhood businesses and homeowners, under the proposal advanced by Commissioner Jessie J. Knight Jr.
But the majority proposal, crafted by Commission President Daniel W. Fessler and Commissioner P. Gregory Conlon, would limit competition among power plants to a wholesale market, or power pool, at least for the first two years of deregulation. In that scenario, there would be a uniform pool price--changing each half hour--and customers with time-of-use meters could adjust their consumption according to price.
The simplest time-of-use meters would cost about $100, and existing home meters could be modified to give some basic time-of-use information, according to Ronald D. Nunnally, Edison’s manager of system planning. One way to pay for them: The utility that delivers power to customers would advance the cost, which would be repaid in installments through customers’ utility bills.
Meters could help all customers “to change usage to get the benefits of cheaper prices,” Nunnally says. But he notes that for customers who don’t want the bother, any likely deregulation plan would require the utility to continue to offer averaged rates, as it does now.
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The New Technology of Electric Power
In the latest draft proposals for deregulating California’s electric power industry, technology would help promote consumer control over electricity costs--and hopefully lower rates--as part of a market-driven system. Both proposals, released May 24 by the state Public Utilities Commission, call for electricity transmission operated by impartial administrators, something like air traffic controllers, as well as technology to make customers aware of the fluctuating price of electricity.
How It Would Work
Electric Generation: Power producers generating electricity from a wide range of sources will compete with one another on price, selling power either to the independent system operators or under one plan directly to customers.
Power Transmission: Impartial administrators would schedule the physical movement of electricity over the power grid--the system of interconnected power lines--to provide for fair competition among all power producers. In the PUC’s majority-supported plan, the system operator would also manage a competitive auction to acquire electricity for a wholesale pool. One commissioner’s proposal would allow direct retail contracts between customers and generators. Currently, utilities and state and federal regulators control all these functions.
Utilities: Utilities would still deliver power to customers.
Customers: Customers could use meters to keep track of the changing price of power generation, through the day or from different power plants. In a variety of ways they could use this information to lower their power bills. For instance, both manufacturing plants and ordinary residents could lower electricity charges by shifting their use to lower-cost periods of the day, much as telephone consumers can, or by negotiating long-term contracts with power plants based on trends in power prices.
