Smart meter swap promised savings that never came
A shift to real-time pricing, expected to save consumers $338 million, was derailed by a billing debacle and a lack of competitive energy suppliers.
BY TUX TURKEL PORTLAND PRESS HERALD
Recent attention has been focused on Central Maine Power’s billing problems. But its roots go back to an unfulfilled promise that led the Public Utilities Commission nine years ago to approve smart meters, the digital partner for today’s billing system.
The promise was that smart meters would give home customers real-time information on electricity costs, so they could shift power use to when it’s less expensive. Dry your clothes at 10 p.m. and save a few cents. To encourage that outcome, taxpayers chipped in $96 million to install smart meters.
But what few people understood at the time was that the potential couldn’t be realized until CMP upgraded its vintage billing system. Additionally, CMP only delivers the power to 620,000 Mainers’ homes. The companies that generate electricity also had to buy-in to real-time pricing.
CMP’s upgrade was deferred and delayed for years. When SmartCare, the new billing system, was finally launched in 2017, it was plagued with problems and complaints that are still being resolved.
And real-time pricing for home customers? It doesn’t exist in Maine.
The reasons why are complicated.
First, CMP had to install smart meters, which digitally measure and transmit electricity use by the hour. The meters can upload a wealth of detailed data about electricity use over the internet, allowing for things like charging different rates at different hours. They also reduce the need to build new power plants, or run older generators that are less efficient and emit more pollution.
Then CMP had to upgrade its billing system so the digital meters could communicate with the system that tracks and bills customers for their electricity use. Those changes are now in place.
But energy suppliers are not. Electricity suppliers negotiate their prices on a regional grid. Consumers have the option of buying their electricity from a generator whose prices change weekly or monthly, known as competitive energy suppliers. But the vast of majority of Mainers – about 85 percent – use a default, government-approved “standard offer” for their electricity provider. Those prices only change once a year.
Without pricing flexibility from energy suppliers, there’s no opportunity to offer real-time pricing to consumers.
“When the PUC approved the smart meter and billing system, we envisioned a robust market (for real-time pricing) would be developed for all classes of Maine electricity consumers,” said Harry Lanphear, spokesman for the Maine Public Utilities Commission, which regulates utilities. “While the large-customer market is very mature, the residential market is not.”
At the time of the switch to smart meters, CMP expected that consumers would save $338 million over the course of 20 years. That would have averaged about $30 per year, or $2.50 a month, per customer account.
Maine isn’t alone in its stalled plans for real-time pricing, according to Cameron Brooks, a Colorado-based energy consultant who works with utilities on grid updating and smart meter deployment. Technical barriers, as well as finding a way to help customers save money that allows providers to make a profit, have been hard to design. Outside of Texas, he said, few states have found that solution.
“There are many benefits smart meters can bring,” Brooks said. “But many of them are unfulfilled promises.”
The trade group representing private energy companies says the residential market just hasn’t developed yet. Conversely, commercial and industrial electricity consumers have the scale to negotiate pricing options.
“I think the market is still a bit nascent for suppliers offering real-time rates,” said Frank Caliva, a spokesman for the American Coalition of Competitive Energy Suppliers. “It has to make financial sense.”
MARKET, TECHNOLOGY CHANGES
CMP first proposed upgrading its legacy analog meters to digital models in 2007, but the cost proved prohibitive. A new opportunity came two years later when the federal government, stuck in a deep recession, offered grants meant to help pay for smart-grid investments. After months of hearings in 2010, the PUC approved the $190 million smart meter project, which was offset by a $96 million federal grant. These grants were common during the period, according to Brooks, and many utilities took advantage of them.
Some states are doing more with real-time prices, using technologies not envisioned when Maine first debated smart meters.
For example: Texas-based Griddy Energy LLC lets homeowners see the hourly ups and downs of power prices through an app, and pay that wholesale price. They pay Griddy a $9.99 monthly fee. The idea is that customers can turn down their air conditioners, for instance, when prices spike during a heat wave. According to Griddy, its customers have enjoyed average savings ranging from 17 percent to 30 percent since 2013. Recently, France energy giant Electricite de France SA invested in Griddy, which plans to expand into New York and 13 other states.
In states where utilities still both generate and distribute power, options are emerging that use wireless technology not imagined in 2010 — smart thermostats. In New York, ConEdison offers customers rebates if they install smart thermostats that let the company bump up the setting on their air conditioners a few degrees, for up to four hours on the hottest summer days. Customers can manually override the change, if they want. They just don’t get the savings.
When or if similar programs come to Maine also will depend on whether they can be designed so that customers feel it’s worth the trouble to change their behaviors or learn new routines, Brooks said.
“No one wants to go through the brain damage to figure out how to save 50 cents,” he said.