Will Smart Meters Be Cost-Effective?…You Will Decide!

Smart meters are the latest rage and Tallahassee is on the cutting edge. Our electric utility began investigating smart meters before 2005 and received the go ahead to spend approximately $40 million from the City Commission in late 2007.

This puts us ahead of the Texas utility Oncor and Southern California Edision  who are spending $690 million and $1.3 billion respectively to roll out smart meters by 2012.

What are smart meters? Smart meters replace the traditional electric meters we are all used to with a more advanced device that promises  a number of benefits. These benefits include remote meter reading, power theft detection, remote cut-off and turn-on capability, customer billing and usage data on-line and the potential for in-home usage displays.

However, if all of these ” information” benefits are realized, the $40 million smart meter program will still not be cost-effective. The City’s assessment of the fiscal impact of the smart meters was clearly presented to the City Commission on March 28, 2007:

Staff does not expect operational savings alone to exceed the capital investment within the first 15 years of deployment. However with good customer participation (25% or more) in load control and pricing programs, staff expects that operational savings coupled with future avoided capital costs (associated with building new power plants) will exceed total program costs.

Cost effectiveness of the program will be determined by the participation of the citizens of Tallahassee in “pricing” and “load control” programs not yet devised by officials or discussed on the City of Tallahassee’s website.

Simply put “pricing” program means that electricity will cost more during peak times instead of the same price all day long.  This program will allow the City to price electricity at a higher price during peak times and therefore “move” usage to off-peak times. With enough participation this will avoid building additional power plants.

“Load control” programs will be voluntary and will pay citizens to allow the City of Tallahassee electric utility to cut-off their air conditioner or some other power gulping appliances for a couple hours during the hottest days of the summer. Again, depending on participation, this program will avoid the need to build additional power plants.

City officials based their analysis on the participation of 25,000 households or roughly 25% of all residential customers in  pricing and load control programs. Without this level of participation the analysis shows that the program will not be cost effective.

City officials are confident that the progressive nature of Tallahassee and  the conservative estimates in the analysis will make smart meters a winner for Tallahassee.

There are additional factors that should be noted. First, city officials did point out to the Commission that there is not much of a track record for the type of programs required to make smart metering cost effective.

Second, the track record that does exist for variable pricing and load control programs is mixed. A California utility reported good results  in a pilot, but other utilities in the Northwest and Maine abandoned the programs after trials.

Third, the informational benefits will come before the pricing and load control benefits. City officials say that the pricing and load control programs are 2-3 years away.

5 Responses to "Will Smart Meters Be Cost-Effective?…You Will Decide!"

  1. We had several intalled in some houses that caused damage to the meter housing. We called the City and they said they have not received any complaints. I call Honeywell rep and he tells me they have had a lot of problems. We have spent over $600 for an electriction to come out because the meter housing needs to be fixed. I am still waiting for The City rep to call me back about who should pay for the repairs. They wait and hope you will get tired of calling.

  2. Everyone that I know that has a new “Smart Meter” on there house or apartment says that their electric bill has nearly doubled. Whats with that. Me & my girl stay in a one bedroom apartment, I unplug everything every morning before we go to work & we still have a $250 electric bill. If nothing is using power from 7:30am- 5:30pm how can my bill be that much?

  3. The bigger picture should be how to reduce Kilowatt use, at point of use, ie the home. The 850 BIllion stimulus package repealed tax credits for geothermal HVAC systems which could save individaul homeowners 25-50% electrical usage/costs. If the City Smart System monies were spend on replacing inefficient AC systems say by 25% it would result in delaying a new power plant source. If tax federal credits were reinstated and increased, if the city lending programs included alternative geothermal HVAC systems, HVAC Contractors could train, hire and install these systems. The end result having an exponentially different outcome than a computer system that would act like a disciplining parent.

  4. Has there been any discussion on if the cost of running “smart” meters and “collectors”, as they use electricity and the collectors still need a network connection, offset the cost of meter readers?

    Has a complete smart meter route been read correctly yet?

    Is it true that all the meter readers will become meter techs and there will be no labor savings?

    Has the cost of all the back end administration, techincal and IT resources been used in the calculation of the ROI?

  5. Has the city implemented variable pricing?

    Will the city reduce disconnect and reconnect charges since it will be able to be done remotely?

    What online capabilities are available with each phase of the project?

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