Speakers: Smart meter sector needs help from regulators
ORLANDO–Currently, smart meter penetration nationwide is less than 5%, and use of the intelligent devices won’t proliferate—and consumers won’t reap their full benefits—until regulators change the way they think. So said two speakers yesterday at the Utilities Telecom Council’s annual conference.
One of the problems facing utilities is that regulators over the past two decades have kept rates artificially low, according to Mike Burns, senior product manager for Itron, which develops communications systems for automatic meter reading applications. Burns added that rate freezes over the past 10 years have retarded capital investment to the point that utilities now are left with severely aging infrastructure.
The situation is so critical that it will take investment of $900 billion over the next 10 years and $1.5 trillion over the next 20 years, “just to keep the lights on,” Burns said, adding that “we’re heading for a train wreck.” That’s not going to leave much money for migration to next-generation technology such as smart meters.
Not only have regulatory practices discouraged utilities from investing in their infrastructure over the past couple of decades, current policies are such that even if utilities embarked on widespread deployment of smart meters, they and their customers wouldn’t be able to fully take advantage of all the data they collect.
“Smart meters and dumb rates accomplish absolutely nothing,” Burns said.
For example, many regulatory agencies across the country have been slow to adopt peak-time or real-time pricing rate structures. Without such rate structures, consumers can’t benefit from rebates that they would earn by reducing consumption at peak periods or by purchasing energy when prices are most advantageous. Smart meters make both actions possible.
“It would be difficult to compensate customers for what they generate without smart meters,” Burns said.
One of the reasons regulatory agencies are reluctant to adopt peak-time or real-time pricing structures, according to Burns, is that they are under constant, intense scrutiny from consumer-advocate groups, which are concerned that consumers would end up paying more for energy because most of them won’t understand how these pricing plans work. Burns said that regulators are “deathly afraid” of a circumstance where consumers would see their bills double or triple after the adoption of such pricing schemes.
“They wonder, “Am I going to lose my job if this goes bad?’” Burns said.
The way to get through to regulators regarding smart meters is to develop a business case so compelling that it can’t be ignored, said Dr. Henry Jones, chief technology officer for SmartSynch, a vendor of advanced metering systems. Jones added that the way to do that is to “look at who’s been successful thus far.”
For example, Southern California Edison has deployed smart meters. And even though those deployments represent just a quarter of one percent of the utility’s total meters, they account for 50% of its total revenues, which translates to more than $2 billion annually, Jones said, because they are significantly more accurate than legacy electromechanical meters.
“The move to [advanced metering infrastructure] is a huge upgrade,” Jones said.