Smart meter backers see role in Texas power market debate

HOUSTON -- Just a few years ago, Oncor Electric would ask Texas customers to switch on their porch lights during outages so workers would know which houses did -- and didn't -- have power.

It was the best way to make sure no cluster of darkened homes was overlooked. Today, with millions of so-called smart meters in place across deregulated parts of Texas' power market, companies such as Oncor often have a more efficient and reliable way to pinpoint which customers need attention.

But gains from improved meters don't end with operational upgrades, backers say. New technology is poised to let Texans play a more active role in managing electricity usage, potentially helping to reduce peaks in demand that strain the grid during the hottest and coldest days.

Texas regulators and grid experts are evaluating how to maintain a reliable power supply amid a growing population, including possible changes that might encourage producers to build more generation. Any efforts that rely on altering consumer behavior will need to get residents interested and engaged in competitive electricity plans.

"I think people are still kind of in the regulated mindset," said Randolph Moravec, executive director of the Texas Coalition for Affordable Power. "As retail electric providers offer new products, I think people will eventually get to the point where they will start paying attention."


It's been more than a decade since much of Texas was introduced to retail electric competition, which allows customers to choose a retailer and a pricing plan. Companies that deliver the power, such as Oncor and CenterPoint Energy Inc., remain regulated. More than 6.6 million smart meters have been installed in deregulated areas of the state, according to the Public Utility Commission of Texas.

These advanced meters are digital devices that have two-way communication capabilities, as well as the ability to show consumers data on their electrical usage, according to a 2010 report from the commission. Older electro-mechanical meters needed to be read by workers and usage information for customers came in a monthly bill, the commission said.

Seeing positives

Retailers and distributors alike report benefits of the advanced meters, which were rolled out over the past several years and are being paid for through customer surcharges.

Oncor, for example, has put in about 3.2 million such meters at a cost of about $700 million. The company has been able to remotely accomplish more tasks, eliminating almost 50 million miles driven by its vehicles since March 2009, said Jim Greer, chief operating officer. CenterPoint, which has about 2.2 million meters that cost about $640 million, said remote meter readings, as well as connections and disconnections, have led to $24 million annually in savings from eliminated fees.

Some retailers, seeking to stand out from their competition, are offering plans that give customers more flexibility based on when they use electricity. They also want to keep consumers satisfied, even if retailers aren't the ones who generate or directly deliver power.

"We're the ones in many cases that get a phone call when the power's out," said Jennifer Pulliam, director of products and innovation at TXU Energy. "So reliability and costs are very important for us to help do our part so that we can manage and create the right consumer engagement over time."

TXU Energy's programs include ones with free night or weekend power, with higher rates during peak times. The free nights plan includes no charge from 10 p.m. to 6 a.m., Pulliam said. In August, the company said nearly 100,000 Texas customers had selected the free nights or weekend plans.

Reliant, which is part of NRG Energy Inc., has touted a plan that rewards customers through billing credits for conserving when demand is high. In July 2013, Reliant said results from a previous pilot program showed a 33 percent drop in power use. If 325,000 residential customers cut consumption by that amount in a high-demand period, Reliant said, the grid would have enough added capacity to power an additional 100,000 homes.

Monitoring power use

Moravec said plans can become even more sophisticated. There could be variable pricing like on some toll roads, where people are charged based on how crowded the highways are, he said.

Doug Shoemaker, who participated in a project with Reliant for products and services, said an energy monitor in his Houston home has changed the way he thinks about electricity. Shoemaker said his family sometimes hangs clothes to dry and adjusts air conditioning levels, and he may replace certain windows to make his house more energy efficient. His three children also can get a daily sense of what power costs, he said.

"Each one of them, when they're washing their hands at the kitchen sink, can glance at the home energy monitor and understand this is how much money we have spent today on electricity," Shoemaker said.

The ability to measure when people use electricity was long missing from the industry, said Dan Delurey, president of the Demand Response and Smart Grid Coalition in Washington, D.C. Having that level of data creates the ability to send price signals to customers, as well as to help them change how they use power, he said.

That can benefit the supply structure, which is a change from the past, he said.

"The history of the utility industry is always turning on another plant," Delurey said. "When the system has been threatened because of rising demand, the only recourse was really public appeals, just asking people, asking businesses, factories and whatever to cut back."

Delurey said smart meters provide a platform for the next era of energy efficiency that includes advanced thermostats that can come with default settings.

Extensive research on just how customers behave is being undertaken by Pecan Street Inc., a research institute in Austin. The challenge is getting people to spend time thinking about electricity, when it's often something they don't want to evaluate, said Brewster McCracken, chief executive officer of Pecan Street.

"People just aren't that interested in their electricity use," he said. "They just want it to work, and not have to put a whole lot of bandwidth to thinking about it."

Grid operator outlook

The possibility of blackouts might get customers' attention.

The Electric Reliability Council of Texas, the state's main grid operator, asked for conservation Jan. 6 after some generation went offline during a cold snap. The council didn't have to institute rotating outages, as enough generation was found. Still, a group of generators warned that blackouts may be part of Texas' future without changes to the state's power market.

ERCOT, as the grid operator is known, is studying the outlook for future reserve margins, or how much excess supply is available. The council said this month that a revised forecast shows peak demand rising 1.3 percent a year in the next 10 years, compared with growth rates as high as 2.5 percent in some earlier forecasts. When applied to previous projections, the slower growth rate may mean worries about tight reserve margins will ease in coming years.

The Public Utility Commission of Texas continues to look at ways to adjust the market. A workshop on Texas' resource adequacy is planned for May, though it was delayed from earlier in the year. The state is considering options such as a capacity market, in which companies would get paid regardless of whether volumes are needed. Generating companies have expressed support for capacity payments amid a period of lower power prices, while others such as consumer groups have opposed the idea.

Conservation and efficiency are among the factors that need to be considered when examining the state's future power needs, said John Fainter, president of the Association of Electric Companies of Texas. He said Texas' growing population means, however, that more generation will be needed, and capacity payments are a route to consider.

"The main thing we're after is a reliable system," Fainter said. "That's the most important thing, and that's the most important thing in the customer's mind."

Meter opposition

There still are those who don't like the idea of advanced meters.

Texans Against Smart Meters has an online announcement asking people to attend a public meeting on the subject next month in Austin. The group's website raises concerns such as privacy, freedom, health, cost and information security.

"Much of your life involves energy consumption and your living patterns will now be monitored and information collected and stored about those living patterns," the group states on its website. "We believe all a utility company needs to know about us is how much we use per billing period and if we are" paying bills.

Patriot Shar, founder of the anti-smart-meter group, also called for independent tests of the devices, citing concerns about possible radiation.

CenterPoint said fewer than 50 customers opted out of its smart meter rollout.

As advanced meters continue to spread across Texas, Moravec likened the possibilities in electricity to the sweeping innovations that have taken hold in the telephone business. He said he doesn't necessarily see a need for additional power plants, adding that it should be decided by the market.

"Deregulation in the telecommunications industry has allowed for the advances of technology that allow us to do things now with phones that we couldn't even comprehend 15, 20 years ago," he said. "And I think the same thing will happen with electricity."

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