These two questions require similar background, so I decided to keep them in the same blog post.
To answer the first question (or debunk it), it is against the mission statement of most utilities to control your appliances during peak demand periods. Their mission statements typically include some type of wording that states “to provide reliable electric service”. But, this seems to be a big concern by many consumers. They fear that if they allow the utility to install a smart meter, than the utility can control their power and appliances and therefore will not be providing them with reliable electric service.
Why would the utility want to turn off your appliances in the first place? Well, to meet the peak demand at certain times of year, utilities build what they call ‘Peaking Plants’. These plants are expensive to build, run and operate, and are part of the reason electric rates in some areas, are high (rates are based on total yearly utility costs, averaged for the year and pro-rated among all customers plus a contingency figure). If the utility can prevent turning a peaking plant on, they can make bigger profits, so it is to their advantage (if they were to disregard their mission statements) to be able to control a consumers appliances. On the opposite side, the utility may not have a peaking plant to accommodate the peak load and may have to shed some load to prevent system failures, which actually lowers their profits. In either case, the consumers would not be happy if the utility decided to turn off a consumer’s house, a/c or even washer, dryer or dishwasher to lower the peak demand.
It appears that the utilities are aware of the ‘big brother’ concern and aside from contradicting their mission statements; they are not pursuing this line of control due to the public’s concerns. They are leaving the option to the consumer through demand and TOU pricing. This of course raises concerns on the utility end as to what to do if there is not enough power to go around or to prevent the need for a peaking plant, which brings us to the answer for the second question in the title.
Utilities are confident that implementing smart grid measures will lower the peak demand to the extent that some have even gotten rate cases passed that include smart meter implementation and demand pricing over peaking plant development. I’ve seen statisitics that boast a median peak reduction of 14% to 18% using smart meters and dynamic pricing, so the theory behind it seems to hold out in reality.
The utility can control the smart meter by turning it on or off, but only if you are delinquent in paying your bill or the residence is empty, which eliminates the need for a utility truck and personnel to physically go to the location and disconnect the meter. The smart meter also eliminates the need to read the meter as it will report electronically back to the utility. These two activities, I would imagine, cost the utility a lot of money and by eliminating them, overhead costs would decrease, but peak power production remains the same. So, to lower peak power production, you need to look at two things, the grid and the consumer.
The consumer will lower their peak power through TOU or dynamic pricing (see my previous blog entry) but how does the grid affect peak power production? Smart meters allow the utility to see exactly where power is needed and they can optimize the system to suit these loads. Additional smart grid components report conditions back to the utility allowing them to adjust the system as well. The smart grid components promote grid efficiency through decreases in line losses and conservation voltage reductions (CVRs) and result in a more efficient grid that requires less power.
So, in summary, implementation of a smart grid, smart meters and TOU/dynamic pricing does yield less peak power production, which will spare the consumer from an unwarranted appliance schedule!
