Could the Smart Grid Finally Do Some Good for Consumers? -
Americans shop for viciously for bargains, whether it’s getting plane tickets from discount web sites or driving across town to save 30 cents on a tank of gas. But when it comes to electricity, we’ve been simply writing checks for the bills we receive at the end of the month. Few of us know how much we pay for a kilowatt hour, or how many kilowatt hours we use—or what a kilowatt hour actually is.
Since the 1920s, Americans have paid flat regulated prices per hour for electricity. But de-regulated wholesale electricity prices now gyrate extravagantly from nearly zero at night to as high as $3,000 per megawatt hour during a late-afternoon Texas heat wave.
A new study from two UC Davis economists—Katrina Jessoe and David Rapson—suggests that if we had the right information, we could become enlightened shoppers, saving money buying cheap low-pollution hydro or wind power in the middle of the night while turning off the expensive stuff made with fossil fuels in the late afternoon.
In 2009, the American Recovery and Reinvestment Act stimulus provided $3.4 billion to move the US towards a “smart grid.” Establishing that grid involves a long list of behind-the-scenes upgrades but for consumers largely involved the installation of smart meters that record not just the quantity of electricity a home uses, but when it is used. The hope was that consumers who changed their behavior would save money, utilities could avoid building power plants, and we’d all produce fewer greenhouse gas emissions.
To fill all of these roles, though, consumers accustomed to being passive purchasers would have to become active shoppers.