Those of us in the lean manufacturing world have known for a long time that one of the most powerful ways to create change and efficiency is by leveraging the knowledge, creativity, and ideas of people. You have to give them the knowledge of their environment via metrics and information, provide them with tools and training to learn how to impact that environment, and rewards when positive change occurs.
The same phenomena can obviously be used outside of manufacturing. For years businesses has had the equipment, and financial incentives, to monitor and adjust their power usage which has helped the electric utilities level demand. As someone who used to run an operation that built equipment that could test hundreds of communications lasers at a time, during the California power shortages at the turn of the century, I was distinctly aware of this capability each day.
Now the same knowledge, tools, and rewards are being applied to the residential electricity consumer.
Can "smart" meters get consumers to reduce the amount
of electricity they use? That’s the bet that many U.S. utilities are
Facing soaring costs, power companies are equipping
millions of homes with advanced meters that monitor energy use much
more precisely than regular ones. That makes it easier for consumers to
figure out when energy supplies are stretched thin — and for power
companies to get consumers to cut back at those critical times.
First you have to provide the tools and knowledge.
Until recently, programs like these mostly were reserved for big energy
users because it was expensive to equip residential customers with
smart meters and other control equipment. As the market grows, though,
costs are coming down. In many cases, utilities also say that advanced
meters will cut operational costs, such as meter readers.
Then the incentive to use that new knowledge and the rewards to change the behavior. For example:
Customers that cut electricity use at high-stress times will be
rewarded with a credit of $1.50 for each kilowatt-hour of electricity
reduction. So a customer who cuts consumption, from a baseline amount,
by six kilowatt-hours on a single day would receive a $9 credit in
addition to direct energy savings of 90 cents.
Individual consumer behavior changes…
Under the program, the Haneys were charged high prices
for electricity during the summers of 2006 and 2007 from 1 p.m. to 6
p.m. In addition, on up to five occasions each summer when the grid was
especially stressed, the Haneys received an email alert from PSE&G.
The utility told them it was imposing "critical peak" pricing the next
day and would be charging $1.46 a kilowatt-hour from 1 p.m. to 6 p.m.
instead of 23.7 cents.
Mr. Haney, an engineer, says he set the family’s
programmable thermostat so that the house temperature gradually would
rise to about 80 degrees from 70 degrees by 6 p.m. on the critical
days. The increase in temperature was so gradual, says Mrs. Haney, a
retiree who cares for the couple’s grandchildren during the day, that
"I didn’t notice any difference."
And is rewarded…
Bob and Helene Haney of Cherry Hill, N.J., say they not only reduced
their household energy use at key times but also saved $350 in an
18-month period, cutting their utility expense by about 10%.
The change in behavior… the savings… can be very significant to the owner of the constrained resource.
One test in New Jersey got dramatic results by boosting rates at times
of peak demand. Public Service Electric & Gas Co., a unit of Public Service Group Inc., gave 320 customers advanced meters and special thermostats that
let them control their heating and cooling much more precisely. Then
the utility imposed high rates at certain times. The result: a dramatic
47% drop in usage among the test group.
Once again, people are much more than just a pair of hands… they have brains. There’s value in ‘dem neurons!
Mark Graban says
On a similar note, I saw a story on BBC tv last night. They talked about how the power companies were only checking meters every 2 or 3 years (a big batch… and less often than they are supposed to check). Customers were getting “estimated” bills and since rates had gone up so much, if actual was >> estimated, customers were getting bills that had jumped by 10x to make up for the difference.
You’d think part of any business would be billing accurately. Shouldn’t it be the power company’s loss if their “estimates” were horrible???