Imagine an electricity meter that can pinpoint power outages, automatically turn household appliances off when wholesale electricity gets too expensive and - with enough of them in use - possibly reduce the need for new power plants.
All rank among the potential benefits of so-called smart meters, which are fast becoming the darling of the utility industry as state and federal regulators push power providers to cut energy costs. Utilities are turning to the devices as they struggle to meet demand, which in some areas is expected to outpace construction of new power plants and transmission lines. The meters average about $100 or more per household to install, but advocates insist that consumers will save much more than that in power costs over the long run.
FOR THE RECORD - An Page A1 article Sunday "smart meter" technology incorrectly stated that Baltimore Gas and Electric employs contractors to read electric meters in its territory. The meters are read by BGE employees.
The Sun regrets the errors.
Baltimore Gas and Electric will join the movement this year as it begins testing meters that, among other things, could save customers money by rewarding them for using less power during times of peak demand, as on hot summer afternoons. The technology works in part by making it possible for utilities to measure a customer's power use on an hourly basis without the need for meter readers, who must head into residential neighborhoods to collect the data.
Many experts say the trend reflects a growing realization among utilities and policymakers that cutting demand might be a faster and more effective way to bolster the nation's aging power grid than building new plants. It also represents a seismic change in thinking for utilities, which have historically seen their profits linked to how much electricity they sell.
"It costs less to not use [electricity] than it does to construct new generation," said Ray Dotter, a spokesman for PJM Interconnection, which manages the power grid for Maryland, the District of Columbia and 12 other states. PJM supports the use of smart meters as a way to balance energy consumption in the grid.
Though critics worry that utilities are pouring billions of dollars into technology that would be better spent on conservation, most agree that benefits are to be gained from smart meters.
Currently, most residential customers pay the same electricity rate day after day no matter when energy is used, even though the true price of power can change drastically throughout the day and year.
A key feature of smart meters is the ability to record a customer's energy usage hourly and then send that data back to the utility over low-voltage power lines or through wireless transmission. The technology eliminates the need to have meter readers go out into neighborhoods to collect the data - a function performed by subcontractors in BGE territory.
Once smart meters are installed, a utility could use the data to offer customers different rates for using power at different times of day. That would allow utilities to greatly expand and enhance their existing "time-of-use" programs, which could help consumers save on electricity costs.
The financial incentive is designed to encourage customers to reduce demand when energy is needed the most. Most industrial customers already use such an approach, often employing energy consultants to tell them when to curtail usage to achieve the greatest savings. Currently, too few residential households enroll in the time-of-use programs to have a major impact on the power grid. But with residential rates soaring, utility officials say they believe more homeowners will be willing to sign up for such programs.
Some regulators see a day when time-of-use rates will be the norm rather than the exception. For example, Pacific Gas and Electric Co. in California has begun installing 10.3 million smart electric and gas meters in every home in its service territory. The effort will cost $2.2 billion over 20 years and be funded by ratepayers.
The movement got a boost from the Energy Policy Act of 2005, which ordered states to investigate the potential implementation of such "demand response" programs. Those studies are under way in Maryland and elsewhere.
Done right, proponents say, demand response programs can shave as much as 10 percent to 15 percent off customers' bills by rewarding them for shifting certain tasks - such as washing dishes or doing laundry - to early morning or evening hours. State and federal regulators say the potential for savings might be greatest in the Mid-Atlantic, where a shortage of transmission lines can send wholesale power prices soaring during a heat wave. Wholesale power that might normally sell for $60 to $100 per megawatt within PJM can briefly climb to more than $1,000 on exceedingly hot days.
"The good news is that when markets are tight - like they have been in the PJM - even small changes in demand can have a big effect in reducing the wholesale price of electricity," said William R. Prindle, deputy director of the American Council for an Energy-Efficient Economy in Washington. BGE has consulted with the energy policy group on conservation programs it is developing.