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Smart Meters, Dumb Backlash

Smart Meters, Dumb Backlash

Andrew Price/GOOD

March 09, 2011

Smart meters can save energy and money and prevent blackouts. So why did the residents of Bakersfield, California hate them so much?

As Barack Obama signed the $787 billion economic stimulus bill in February of 2009, he promised it would “place smart meters in homes to make our energy bills lower, make outages less likely, and make it easier to use clean energy.”

Sounds great, right? But in Bakersfield, California, one of the first American cities to get smart meters on a large scale, many residents hated them. Pacific Gas and Electric, California’s largest utility company, was sure its smart meters would be a hit. Instead, it faced an unexpected consumer backlash and a public-relations nightmare.

First, the basics: A smart meter is just a higher-tech version of your current home-electricity meter. What makes it “smart” is that it can measure a house’s energy use in real time (or near real time) and report back to the utility company remotely.

Because they can send information back to the utility company, smart meters make meter-reading trips to customers’ homes unnecessary. That saves utility companies money. But the big benefit of smart meters is “dynamic pricing.” By providing utility companies with near real-time information about how much energy people in a given area are using, smart meters allow them to set the price for electricity according to the current demand.

That means that the price of electricity might be higher in the middle of a hot summer afternoon, when lots of people are using air conditioners, and lower during a temperate spring night, when most appliances are off. With dynamic pricing, consumers know when to conserve, the utility company knows how much electricity to provide at any given time, and outages are much less likely because the variable price keeps supply and demand in balance.

After California’s energy crisis of 2000 and 2001, the promise that dynamic pricing could prevent blackouts was especially attractive. As Governor Gray Davis said at the time, raising prices during periods of peak demand would have “solved this problem in twenty minutes.”

From 2003 to 2005, California ran a pilot study with 2,500 customers, to make sure people actually responded to dynamic prices. The results were dramatic. With dynamic pricing, people dropped their peak demand by 13 percent. So in 2006, PG&E started handing out smart meters in Bakersfield, a fast-growing oil and agricultural city in the hot Central Valley. For two years, the rollout in Bakersfield went smoothly enough. Then, suddenly, late in the summer of 2009, customers started complaining. Their bills had spiked considerably, they said, and many were suspicious that the new smart meters might be at fault. This was surprising: The initial rollout didn’t involve dynamic pricing; it was just laying the groundwork by getting the smart meters into people’s homes.

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