With San Diego Gas & Electric Co. lobbying ferociously, the California’s Legislature is poised to approve the first overhaul of electricity rates since 2001. Somebody’s going to get hurt.
By itself, this isn’t remarkable. Our system of regulating utilities creates winners and losers any time the government tweaks the way power costs are spread out among consumers.
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What’s different this time is technology. Lawmakers, and eventually regulators at the Public Utilities Commission, are wrestling with the advent of “smart meters,” the first major advance since the days of Thomas Edison.
In theory, smart meters make it possible for consumers — or their networked appliances — to see the hourly swings in power prices and adjust their lives accordingly.
If the price goes way up on a summer afternoon, my neighbor can just set his pool pump to run after midnight, when air conditioners aren’t running and power is dirt cheap.
Shifting peak consumption statewide by 10 percent or so would allow California to avoid building relatively inefficient, polluting “peaker” generators, and rely on its massive investments in wind and solar power.
That’s theory, anyway. Nearly all of the expensive smart meters installed in recent years don’t show prices.
Utility executives and their PUC regulators are terrified of mandating true price transparency.
Electricity is the world’s most volatile commodity. Prices in the daily spot market can hover near zero at 3 a.m. and shoot to $1.50 a kilowatt hour on a hot summer afternoon, when air conditioners kick on and the state flirts with shortage.
Most of the state’s power is bought on long-term contracts, so smart meters wouldn’t go that crazy under even the most wild-eyed free market scenario.
Still, economists and efficiency advocates have been rooting for widespread “time-of-use” pricing for years. Recent results from pilot programs suggest that households will cut their peak consumption by 15 percent if they can see and understand when prices surge.
Yet utility and executives remain wary of blowback.