By: Tiffany Richmond
How smart are ‘smart meters’ anyways? Is it all about conservation? You can adjust your consumption habits, reduce demand intake and control your electricity cost. Seems easy, right? Well I beg to differ.
As the ‘smart grid’ continues to enter into the early stages of Ontario’s existing electrical distribution system many questions/concerns are being raised by industry experts. How will new ‘smart’ technologies benefit the end consumer? Are electricity costs going to increase? How can the end consumer save money on its electricity bill?
When smart meters were first conversed at the political level, politicians only reaped the benefits of the smart meter concept – a more conservative and efficient system, it helps end consumers manage their electricity costs and will reduce Ontario’s environmental footprint. But what politicians seemed to leave out is that in order to achieve the above benefits, it comes at a cost. And who’s going to pay for these benefits? Well who esle? The end consumer, you and I.
Currently in Ontario most homes are equipped with a meter that only measures how much electricity was used by the customer in a billing period, typically one or two months. A smart meter will be able to record not only how much energy was used, but also when it was used daily, occurring in 15 minute intervals. This will allow for the introduction of different electricity rates based on what time(s) of the day consumption occurs, at on-peak, mid-peak or off-peak times. This introduces the time of use rate structure.
There are fundamentally two types of smart meters:
Time Of Use Meter (TOU) – measures how much energy was used in preset time blocks, such as on-peak and off-peak times. These meters provide readings to the Local Distribution Center and are typically read manually like today’s meters but may be equipped with additional technology for automated reading.
Interval Meter – measures how much electricity was used in various intervals (typically every 15 minutes). These meters produce many hundreds of sets of data and are usually read remotely due to the large amounts of data collected.
The Truth – How Smart Meters will Affect the End Consumer
Smart meters allow price setting agencies to introduce different prices for consumption based on the time of day and the season. This means that consumption during peak periods will be substantially more than off peak periods. This will place many end consumers who need reasonably priced electricity during peak periods in a costly situation.
Table 1 highlights the current TOU prices from the Ontario Energy Board
Table 1 – Current TOU Prices May 1 to October 31 2010
As an average electricity end-user if you use more demand during the peak times, say 11am to 5 pm, you will be paying significantly higher prices. From table 1, today the price per kWh is 9.9 cents for peak times. If you want to conserve during this time period you will have to adjust your lifestyle to be more responsive to the electricity market. For example, instead of doing laundry during the day, you do it after 9 pm on the weekdays at the off peak rate.
Failure in the electricity system will also affect your electricity consumption. For example, if there is a spike in electricity demand, like a power outage, and all electric systems turn on at the same time, and this happens during peak times, you will be paying for that system failure.
The technology of smart meters is relatively new to the electricity industry. New system ‘bugs’ may occur and cause interruption on the grid. Smart meters also have a shorter lifetime than standard meters, and need to be inspected more often. If left unchanged, it could add significant costs to the end consumer.
Implementing smart meters also causes major privacy issues. Smart meters will be able to document the time you have a shower in the morning, the time you turn the T.V. off at night, when you’re making dinner and when you’re asleep and awake. This personal energy use would be a treasure trove for hackers, thieves or marketers. Personal privacy measures must be taken to ensure this data does not get in the wrong hands.
Most houses in Ontario are already set up with the smart meter and in some areas (like Milton and Newmarket) consumers are being billed for their time of use. With the price of electricity already rising (check out the article The Good, the Bad and the Ugly on why electricity prices are increasing), electricity consumers can expect a stocky increase in their monthly bills and a hefty change to their consumption behavior when smart meters are fully implemented across Ontario.
Tiffany Richmond has over five years of experience as a marketing professional and is responsible for online marketing strategies at Energy Advantage Inc.