Realizing the Vision of a Smart Electrical Grid -- Installing the Technology is Only Half the Battle.

Charles,

I commend you on posting a well written article that tables the precise customer problems facing the successful use of Smart Grid technology.

Ontario is one of the first jurisdictions in North America to have mandated by law that all Ontario customers, some 5 million of us, will be transitioned to smart metering and to Time-Of-Use billing rates, completely by the end of 2010.

Ontarians already on TOU billing are now being encouraged generally to practice load shifting under TOU billing to save money. We are also being encouraged very strongly with millions of dollars per year in provincial tax money being offered to consumers to adopt more efficiency upgrades and more energy conservation. These are typically in the form of rebates on purchasing better windows, Energy Star appliances, CFL bulbs, insulation upgrades etc.

Ontario’s government realized many years ago that a consumer cultural change is necessary to get consumers to change their behaviors and participate.

There is also widespread Ontario government money being doled out to subsidize commercial businesses and industries to upgrade their buildings and industrial processes to adopt greater efficiencies. Larger industrial plants are even offered the option to participate in demand responses requested by our grid system operator to save on their electricity bills.

Ontario's only demand response program for residential consumers is limited to smart communicating thermostats, operated by our local utility companies. They tend to be an expensive demand response technology being totally independent of the smart metering system, and are loathed by the majority of the public because the utility controls the thermostats. Hence the uptake of these thermostats by willing customers has been very limited.

So how does a consumer really know what to invest their money in? Moreover how does a consumer measure how much they will save if they practice load shifting under TOU rates? Most consumers will not have the time or expertise to determine answers to these questions on their own, and as you say will likely turn to their local utility company to ask. But our utility companies are not in the business of giving out free advice SPECIFIC to individual customers. They only give out general advice.

The answer is to equip consumers with technology to help them answer these questions. Such technology tools exist, the best one to directly measure behavioral changes is a real-time in-home energy display that tracks one's power demand and energy consumption and energy bill in real time. The best ones communicate directly with a smart meter to get instantaneous readings on a consumer’s electricity consumption. The real problem is most of our utility companies under their current regulatory regimes cannot easily fund providing one to customers that want one, nor can they easily fund equipping their smart metering systems to communicate with an in-home display without unpalatable rate increases foisted on all their customers.

Regulatory reforms are badly needed to allow utility companies to raise additional money by commercializing technology tools to interested customers for their own use, or to allow utility companies to offer customer-specific support services for specific advice on efficiency upgrades and conservation measures.

Bob Amorosi, M.Eng.
Resident of Ontario Canada

There is merit in power customers actually knowing the cost of electric power at various times of the day. The financial incentitive in regard to cost savings is often sufficient motivation to reduce excess power consumption during periods of peak demand for power. When this information is absent or when the regulated price of electric power remains relatively constant throughout the day, there is little incentive to use power during the off-peak generating periods and save power during peak demand periods.

I am of the view that market pricing can achieve much to encourage more efficient use of electric power. Increasing the scope of regulation often causes as many if not more problems than it purportedly solves.

Harry,

Agreed customers would be interested in knowing real-time market prices. The TOU billing rates rolling out in Ontario are supposed to reflect real-time market prices, but in essence they are merely three separate flat rates, each uniform for periods of several hours at a time. Further, the difference between TOU on-peak and off-peak rates is not currently large enough to truly reflect real-time peak-to-valley market price differences throughout a typical day.

The historical problem is that government planners have always felt the public, particularly residential customers, could never deal efficiently with being charged real-time market prices. Hence price regulation has been the norm.

Current market real-time price is always available for public viewing, in Ontario it is posted and updated every few minutes on Ontario's Independent Electricity System Operator's website. This is of little use to consumers though since no one would have the time to constantly watch them and take energy management actions in response to them. Automated technology in a home could do so, very easily, and manage consumer energy uses by constantly receiving communication with the grid's real-time prices (somehow), and then communicating with demand response loads on the customer’s premises.

Len Gould’s IMEUC market reform proposals detailed on this website propose just such a scenario for dealing with real-time prices. Too bad there is no technology offered to the public to potentially adopt it.

Some studies have been conducted with groups of residential customers in the US in recent years using an in-home display to monitor real-time market prices, and the results were encouraging last I heard. But without the automation technology to act on them, the benefits to consumers are limited.

Bob, I have seen a clothes dryer in the California ISO's demand response lab that is capable of receiving a price. On Friday I spoke with someone at the Pacific Northwest National Laboratory about whether their smart EV charger could actually buy electricity for the vehicle. The Demand Response Research center at Lawrence Berkeley Laboartory is engaging in "prices to devices" tests.

The onus is on regulators to ensure utilities offer voluntary dynamic prices and then get the hell out of the way. For most consumers, there's no compelling reason to conserve when energy is relatively cheap. Dynamic prices that reflect prices in the wholesale market provide customers with a more realistic way to compared the cost of grid power against the cost of energy efficiency and demand management options.

Jack,

There are multiple issues here. First, it is generally recognized that it will be far better to have consumers control how their demand response appliances or electric vehicles respond (or not respond) to energy price signals. This is why we are seeing appliance manufacturers develop new products that will be programmable by the consumer, so the consumer can "set it and forget it". I wouldn’t be too worried that the utility companies plan to control them, indeed most don’t want to.

Of course these new demand response functions will only work in jurisdictions that have energy prices communicated to these smart appliances. The mechanism of communicating prices to smart appliances, or to smart chargers on electric vehicles, or any other demand response technology, is the real bigger problem. The price must come from the grid somehow, typically through the internet or through a utility company's AMI network and smart meters equipped to do so. Implementing this on the grid side will cost the utility company substantial money particularly if done through AMI networks and smart meters, e.g. to equip every smart meter in their network with optional Zigbee radios, recall Zigbee has been promoted successfully as one of the accepted communication mechanisms.

The last problem is what energy price to send to smart appliances. Do you send real-time market prices, or some similar "dynamic price", or do you send Time-Of-Use billing prices that are typically flat rates for different periods of the day set by regulators. TOU prices makes smart appliances almost useless because their values will be normally consistent and known to everyone for months at a time, as will their time periods. With TOU rates all consumers need are timers on appliances, which many already have. So in effect, smart appliances and smart vehicle chargers only make sense with some form of real-time market pricing. To foist real-time market or dynamic pricing on the public will be tough to swallow for most consumers because without monitoring and tracking technology that is easy to use, most consumers will have no easy way to reconcile their utility energy bills.

Jack,

Perhaps this is already common knowledge with yourself and most readers here and utility industry people, but as far as I know AMI networks, smart meters, and MDM systems are being designed, pilot tested, and deployed in most places in North America for the purpose of implementing TOU billing, not real-time market pricing or other form of dynamic pricing for customers. This begs the question will our utility companies really be supporting the emerging smart appliances and smart vehicle charging schemes that can respond to price communication, and if so how.

I suggest utilities may ultimately be forced to support them by governments mandating they do so. And to pay for supporting it they will either be given (more) large government handouts from the public purse, or alternatively consumers will face draconian rate hikes down the road. Under the current utility regulatory regimes there are no other ways to pay for it.

As an aside, even with TOU billing many consumers will still have problems reconciling their energy bills or correlating their efforts to manage their bills with load shifting. So I suggest real-time in-home monitoring tools are just as important and a necessary technology under TOU billing as they would be under real-time or dynamic pricing schemes.

Agreed Bob, wou've pointed out a major stumbling block to realtime pricing, which is "How can customers reconcile their bill to their consumption actions"? It's going to take some reall smart grid stuff to accomplish that one. Rapid two-way communication from grid central to each customer on demand, some really smart new software....

Thanks Len. Here's another comment for readers here to chew on.

I believe that electricity bill reconciliation will increasingly become a major issue with utility companies. Here's why.

Currently under flat uniform billing rates, if a consumer questions their electricity bill, they can file a complaint with their utility company. It then becomes a fairly routine procedure for the utility company to first verify the customer's meter is working properly and has correct cumulative energy readings, and then verify the calculation of the customer's bill. Some customers can do the bill calculation themselves if they can read the cumulative energy display on their service meter, with bill calculation being a rather simple mathematical exercise.

Now picture customers transitioned over to smart meters with TOU billing. What if a consumer questions their TOU electricity bill. This is bound to happen more often because for a start the smart meters are not going to display their memory contents for TOU cumulative energy readings, the TOU readings will only show up on our bills or on our utility’s website on a secure customer account webpage, updated periodically.

Furthermore, if a customer invests serious money in the new emerging appliances that have price demand response capability, and the utility company supports them and the customer uses this capability, they will surely want to know the savings they are realizing from it. How will customers know what they save without asking their utility company i.e. without questioning their bills.

If utility companies don't like too many customer bill complaints now under flat energy rates, just wait for TOU billing and new demand response appliances to be implemented on a wide scale without any monitoring and tracking tools for consumers' use. And by the way, did I mention we are being told our energy bills are likely to rise substantially too as more renewable energy sources are integrated into the grid. I'm sure the latter will inspire many more consumers to care a lot more about managing their electricity bills.

Len, maybe I am a crystal ball gazer and dreamer here, but I would say there will be steadily growing market opportunities emerging for consumer technology tools to help simply reconcile electricity bills, especially if our utility companies don't provide them to customers. If this sounds like something you have told me (privately) before, you’re one of the best crystal ball gazers on the planet.

Naïve me. Reading these comments I feel a bit like Alice. While I have heard people bitch about the size of their electric bills I am unaware of anyone who actually complaining to the power company or who who questioined the validity of the billing.

Compared to medical, telephone and satellite bills power bills are the epitome of clarity.

And it's not "power" bills it's "energy" bills, there is a big difference in the meaning.

Energy bills are typically the "epitome of clarity" only to more educated people that understand them like perhaps your good self. In past the energy bills in Ontario used to be very simple to read, but today they are broken out into energy charges plus utility delivery charges plus debt retirement charges, and further complicated by tiered rates i.e. the first several hundred kilowatt-hours are billed at one rate followed by a higher flat rate for every kilowatt-hour above that level. The rates are about to become even more complicated by Time-Of-Use billing which is the point of my comments.

A major thorn in Ontario consumers backsides is that our utility delivery charges have an unseen formula because even if you have zero energy use there is a minimum utility delivery charge. People who own cottages up north for example typically close them down for winter months consuming zero energy, but are hit with a minimum charge of something like $50 per bill nevertheless.

I once went into my power company's main office and immediately noticed the extra security present, and signs posted spelling out strict procedures to follow for customers with "questions" or disputes about their bills. I'll bet it's not much different at power companies all around North America.

Guilty as charged, I'm embarrassed and contrite.

We do get telephone bills from the telephone company but to be pure we really ought to say we get telephonic services bills (not bills for telephones) from the telephone company. I am going to try to eliminate using the word power wrongly as in power plants, power companies, power outage, power lines, power shortage, power tool, power boat and power of attorney, et al. and properly use power only when referring to, watts, foot pounds per second and horses.

I didn’t say my electrical energy bill was simple, it’s not. I said my bill was clear - I think about as clear as possible and much clearer than some other bills..

Bob, I am a little surprised to hear you complain about minimum electrical energy company (erstwhile known as Power Company) charges. These charges have always been with us – and for good reason. The fixed costs for a remote cabin are very likely to be considerably higher than for those in the city. Just a few extra poles make a difference.

Analogous minimum charges exist for water, telephone and gas.

You seem to want those of us without summer cabins to subsidize those who do.

When I was young we had superb public transportation. Then we built city freeways and huge parking lots and ridership declined. But when it snowed the public was absolutely inscensensed that they could not get the every few minute service they remembered. And those marvelous street cars and interurbans died. Those advocating “light rail” today seem to be totally ignorant that we once had it and threw it away in the name of progress.

My TI calculator (after many years of good service) died yesterday so I went to my Wal-Mart Supercenter today for a replacement. After unsuccessfully searching the acreage of the huge electronics department I had to ask for help. I was sent to the office supply department and I found exactly what I wanted among tablets post it notes and pencils. At about the cost of an “in” CD.

Don, I don't complain about minimum charges for cottages, but I've heard others that do. Of course we've always had these charges built into all utility billing rate schemes, it's just that bills are increasingly harder for many to reconcile, or figure out. You or I may not have any problem with them, but others do.

For example my neighbor has a swimming pool and central air conditioner that are heavily used during the summer months. He and his wife rack up huge summer electricity bills, some as high as $300 or mroe per month,but don't know exactly why. They whine about it and have come very close calling our local power company and ask them to verify their meter is working properly.

I tell them a real-time energy display would tell them what is going on, but they like many other consumers feel our power company should provide us all one if it were to help people get a handle on their bills and energy uses.

Bob, if your swimming pool neighbors don’t get it after even you explained it I’d say, if I were allowed, they are dumb. Ill say intellectually challenged to avoid committing a hate crime. What do these folks do for a living? Of a morning does someone from an agency guide them to a protected job environment?

Rather than making things more complicated with smart meters why not a card stating something like this: $0.10/kwh from 6 AM to 8 PM, 0.08 from 8:01 to 12 PM and 0.06 form midnight to 6 AM. The card could also inform customers that water heaters and air conditioners and resistance heating use lots of electricity, but not to worry about florescent lighting.

Seems as if the electronic nannies and government nannies are hell bent on taking care of us.

Don,

Our utility company is already providing the card stating TOU rates coming to all of us shortly, and the Ontario Power Authority has long been helping our utility companies with websites and advertising about the relative energy demands of common loads in people's homes.

Trouble is, these measures are NOT ENOUGH to educate many consumers. As long as we get our utility bills for electricity every two months, people are not conscious of their energy guzzling habits along the way. By the time they get their bills, it's too late.

Now the Ontario government and our utility people know all this, and in fact the Ontario government passed legislation as part of the smart meter initiative years ago that mandates all utility companies provide consumers a secure account webpage on their website that is updated by 8:00am the next morning with daily consumption added, and web presentment tools for consumers to view their historical hourly consumption patterns. This will be near real-time but not truly real time. Really, how many consumers will take the time to religiously login to their utility company's website every day to analyze their previous day's habits when they're likely to have forgotten what they had for dinner never mind how long their air conditioner or pool pump ran for, or how much money was spent on any given load yesterday.

I agree with Bob. The issue is being set to only become worse as fossil fuels run out and electric energy increasingly replaces fossil (electric autos, heat pumps, etc. etc.)

Don: Electric bills at the end of 1 or 2 months are far more complex the relate to consumption activities than using the credit card at the gas pumps.

I’ll admit it. Sometimes I think you electronics-oriented guys are straining for a gnat. When I was designing back in the Middle Ages my data usually was seldom better than 2 significant figures. The precision of my slide rule was actually over-kill at three plus significant figures. The existing oil refineries in the US today were all in the main designed with slide rules. As were the bridges we use today, our jet airplanes, atomic bombs, and nuclear generating stations. With slide rules and engineering judgment.

I am not a Luddite. I applaud knowing that running my dishwasher at 3 AM if that is indeed the optimum time. But this is all peripheral, the niceties of efficient electricity metering and billing.

We don’t have a clue as to sustainability. We discuss electric bills but we ignore reducing population – our only salvation.

Don,

Historically most consumers have not been overly concerned about how much money they spent on any given day on their air conditioner or pool pump or stove or refrigerator or furnace or light bulbs, etc., because electrical energy rates have always been a bargain. The amounts you spend even running the heavier load appliances even for many hours a day don't amount to more than pennies per day give or take (the biggest one is usually a central air conditioner which can cost dollars a day if it’s running all day).

Over a typical billing period however of 2 or 3 months, a few or several dollars a day adds up to hundreds. Now complicate your electricity consumption with TOU billing, PLUS more overall consumption when you start charging your new electric vehicle at home someday, PLUS escalating TOU rates for all electricity uses as more renewable source generators are integrated into the grid over time.

Consumers are going to care much more in future about how much they are spending per appliance on a daily basis, hence my claim there will be a growing need for real-time feedback and monitoring, with automation tools to help deal efficiently with demand responses.

Furthermore, Len's radical but potentially revolutionary IMEUC market reform concept is an extension of real-time monitoring and automation that would help consumers further minimize their electricity bills by permitting every participating consumer the choice of what specific generator they buy their electrical energy from, and change it anytime at will.

OK, OK, I’m convinced. What makes me so hard headed about this smart meter and billing issue is that I don’t think the smartest meter in the world could be justified in my case. Knowing only the Great Depression and WWII in my early years I can hardly leave a room today without first turning off the lights. When I saw fellow soldiers letting the hot water run while they shaved made me uncomfortable.

So aside from running my dishwasher in low demand hours there isn’t a hell-of-a-lot I can reasonably change.

Speaking of dishwashers - From the easiest ads for dishwashers and continuing is the claim that they save on hot water. I have even heard home economists say so. What utter nonsense. This claim is based on the assumption that when people wash dishes they leave the hot rinse water running continuously!

Don,

Agreed lifestyle or behavioral changes that can significantly reduce your electricity bill will certainly be a tough pill for many consumers to swallow.

Under TOU billing, some load shifting is obviously easier to bear for non-critical things like dishwasher and laundry machine operation. But furnace heating, air conditioning, stoves, etc. are a somewhat tougher to accept changes in use behavior. The latter will go begging over time for efficiency upgrades to deal with it instead.

BTW Toronto Hydro has their entire customer base of well over 1 million customers on smart meters now, and being the first large utility to do so in Ontario they have already transitioned a large portion of them to TOU billing. And, would you believe Toronto Hydro since the beginning of 2010 is playing radio commercials on the local Toronto airwaves to promote load shifting with all consumers. The radio ads routinely are heard playing during the morning and evening rush hours telling consumers that winter TOU electricity rates are currently at their highest level "on-peak", and we can all save some money by shifting things like our dishwashers and laundry machines to later in the evening hours or to weekends when rates are lowest.

My point is Toronto Hydro has money to buy radio ad time but none to provide customers with new technology tools.