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Updated with comments from Google: There’s a battle looming in California over smart meters and energy prices. Google (s GOOG) says the state should require its big utilities to give near real-time pricing information to every smart meter-enabled customer by the end of next year. California’s big three utilities — Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric — have raised plenty of objections to that deadline, and the California Public Utilities Commission is holding a workshop in San Francisco on Friday to talk about it.
The debate, which could influence smart grid policies across the country, underscores an important difference between the two things Google wants utilities to provide — energy “usage” data versus “pricing information.” Electricity usage is a real thing that can be measured in real time with magnets and wires, either by a smart meter or lots of other devices. Electricity prices, on the other hand, are contrived, during or after the fact, by a convoluted market that has to keep demand and supply perfectly balanced at all times. Delivering pricing data in real time will be challenging for smart meter networks as they’re currently being deployed. So in other words, for utilities, delivering power comes first, figuring out who pays for it (and how much) comes later.
Update: Google has responded to this story, noting that it was not the originator of the CPUC proposal to ask utilities to provide near real-time data to smart meter customers. Rather, Google is one of many parties supporting that proposal which originated from the CPUC last year. At the same time, Google has been a consistent proponent of giving customers access to their energy usage data, says Michael Terrell, Google’s policy counsel.
Most utility customers pay steady, regulated rates, and don’t get to see these complex price fluctuations — at least, not yet. But even getting slightly more complex tiered or time-of-use prices to customers through their smart meters could be problematic for current utility networks, given that most smart meter deployments today aren’t set up to handle that. As Lee Krevat, director of smart grid initiatives at San Diego Gas & Electric, put it in an interview this week, “We didn’t put in an Internet to each meter, or broadband to each meter — and ‘real time’ really implies broadband to give near real time pricing data.”
Most smart meter networks, including those being deployed by California’s big utilities, are lower-bandwidth and designed to be read every 15 minutes or hourly, not in real time. While there are ways to get faster or more current price information to homeowners, Krevat doesn’t see such a network being the best, or most cost-effective, way, to do it.
After all, “The rates exist on our Web site. The rate schedule doesn’t change very often,” he said. “Do you want to spend your bandwidth transmitting something that could be figured out at a customer end point based on their consumption data?”
Or, to put it another way, would utility customers support paying for the ability to see pricing data? The customers are the ones who pay for utilities’ smart meter system upgrades through increased rates. That certainly differentiates the utilities’ incentives from Google, which wants usage and pricing data opened to third party systems like its PowerMeter home energy management platform. Google promises PowerMeter will be free, but building a system that can provide it with data may still cost customers in one way or another.
SDG&E is working with Google’s PowerMeter and has about 125 customers testing it out — but right now they’re using day-old energy usage information, and currently PowerMeter doesn’t deliver any real-time pricing information. Eventually, California’s three big utilities plan to turn on their smart meters’ home area network (HAN) connections, but they’re doing a lot of testing first. Krevat said that’s an important first step in designing a system that’s both cheap and effective — “Understanding the model for how the customer wants to use it is the first step,” he said. “Then you can decide the technical solution.”
Ted Reguly, SDG&E’s smart meter program director, said customers mainly want some kind of current bill calculation, as well as some kind of pre-set alert when that monthly tally gets too high. Someday people will want to hook up smart appliances and other in-home energy controls to the smart meter via the HAN. But as SDG&E noted in its comments to the CPUC filed in March, “the Smart Meter system as currently designed requires more than HAN to provide customer access to near real time information on prices.”
Beyond these issues, it will be important to clarify what Google means by “pricing information,” Reguly said. Does Google mean the flat rates homeowners are scheduled to pay, or the actual prices that they end up paying after the bill is finalized? “You might think the cost of electricity is X, but it’s really Y because of bill settlement two or three days later,” he said — and getting the more accurate figures to customers in real time would require utilities to completely overhaul the batch processing-based back-office billing systems they now use.
Andy Tang, PG&E’s smart grid chief, said during a recent energy symposium in Berkeley, Calif. that asking utilities to replace their batch-based systems with real-time systems was “impossible” in such a short timeframe, at least not at costs that regulators would be willing to pass on to customers. Tang also expressed some frustration with Google’s push for deadlines for delivering real-time pricing, given that the federal government is still working on standards for all the smart grid systems to make this possible, he said. As PG&E wrote in its comments to the CPUC, “No amount of cajoling or wishing by one vendor or another that it happen by an arbitrary date can change the need for development of such uniform standards.”
Just how those standards will emerge remains to be seen. ZigBee, the wireless technology that’s taken a lead in smart meter-HAN connectivity, is working on a second iteration of its Smart Energy Profile specification for energy data that will include some pricing information, Reguly said. For commercial and industrial customers, open demand response technologies like Lawrence Berkeley National Laboratory’s OpenADR or EnerNOC’s (s ENOC) PowerTalk, are expected to embed price signals as part of an automated system to turn down devices to help utilities reduce peak loads.
Perhaps broadband could be the solution. The National Institute of Standards and Technology, the federal entity setting smart grid standards, has asked the smart grid industry to comment on whether some or all of the customer’s smart grid connections should come through broadband connections independent of the smart meter. There’s a long list of companies looking at selling energy monitoring gear directly to consumers, either as stand-alone products or bundled with home broadband offerings or security systems. Google is working with utilities and smart meter maker Itron (S ITRI), but is also partnering with in-home energy devices from Energy Inc. and AlertMe with its PowerMeter.
All three California utilities have asked CPUC to avoid any hard deadlines in favor of looser policy guidance. But the issue COULD comE to every state. The Federal Communications Commission’s new U.S. National Broadband Plan includes some strong words for state utility regulators to encourage utilities to deliver real time pricing data to consumers.
“States should require electric utilities to provide consumers access to, and control of, their own digital energy information, including real-time information from smart meters and historical consumption, price and bill data over the Internet. If states fail to develop reasonable policies over the next 18 months, Congress should consider national legislation to cover consumer privacy and the accessibility of energy data.”
Just how the CPUC decides to take up
Google’s its deadline — as well as how it comes to define pricing data in the process — will be closely watched topics in the smart grid industry. Stay tuned for more details later this week.