With time-variant pricing, people can choose to run their dishwashers at times of day when electricity is less expensive.
New York cemented its reputation as a national leader in energy policy last year when it announced plans to revamp the way utilities are regulated in order to establish a 21st-century energy system. But the state is still trailing in one crucial area: More than 99% of its homes have antiquated meters that tell utilities nothing more than how much electricity customers use each month. To achieve its ambitious goal of an energy revolution, the state should embrace a technology—advanced meters—that empowers New Yorkers to cut their energy use during times of the day when it matters most.
A key component of the smart grid, advanced meters provide detailed electricity-use data throughout the day. This information reduces inefficiencies in the energy system and leads to quicker detection of power outages. Such improvements reduce the costs of operating the power grid, resulting in lower electricity prices.
Advanced meters, also known as two-way-communicating Advanced Metering Infrastructure (AMI), or “smart meters” (which can both send and receive information such as electricity prices and energy usage), enable pricing that incentivizes customers to use electricity when it is cheaper and cut back when it is expensive. This time-variant pricing reduces congestion on the power grid, ultimately lowering costs for everybody. But, without advanced meters measuring electricity use in short time intervals, it’s impossible for utilities to bill on a time-variant basis.
Programs across the country have shown that time-variant pricing becomes much more beneficial to the electric system as more customers enroll. A widespread roll-out of advanced meters will therefore allow a far greater number of customers to adopt time-variant pricing, maximizing the benefits to all.
New York still lags other states when it comes to advanced meters
Across the country, approximately 35% of homes have advanced meters. Here in New York, less than 1% do. New York’s landmark energy reform provides the chance to engage customers in important ways, but without advanced meters, many options are not available.
So why hasn’t this happened yet? Although a huge influx of federal stimulus funds in 2009 helped spur the installation of more than 50 million smart meters in other parts of the country, New York was unconvinced that their benefits would translate locally and took a “wait-and-see” approach to widespread adoption. Although the technology has proved useful in other states, New York has cited high costs for the continued delay.
Earlier this year, the New York Department of Public Service co-sponsored a forum with New York University and my organization, the Environmental Defense Fund, on time-variant pricing to explore how its widespread adoption can reduce electricity use and electricity bills. We heard policymakers, regulators and utility executives describe the benefits of advanced meters as substantial and well documented.
EDF urges local utilities and regulators to consider the benefits of time-variant pricing as part of their decision-making process on advanced meters, as that factor could indeed tip the scales. Utilities could conduct pilot programs to understand the impact of new pricing approaches, or, at the very least, use results from other states to inform their analyses.
Accelerating the roll-out of advanced meters will open doors to the innovative future envisioned by New York’s historic energy transformation.
This op-ed originally appeared on Crain’s.