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One customer's frustration
- Posted on July 29, 2012
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We often hear from utility customers, but many tend to be angry. Others believe that the United Nations is getting to them through their smart meter.
Occasionally I receive a complaint worthy of attention. These correspondents may not have their facts completely straight, but they appear to be genuinely concerned by their perception of local conditions.
At the outset, today, let's note that Intelligent Utility and other groups have recognized Oklahoma Gas & Electric (OG&E) for its SmartHours dynamic pricing initiative, its IT work to support that initiative and its profitable, well-run operation. And the company is welcome to respond to our correspondent's complaint, if it desires.
That said, let's look at an OG&E customer's perceptions and my response. Because the basic complaint might well be about my own endorsement of the role of smart meters, rather than anything OG&E has or has not done. I've endorsed smart meters on the condition that a utility has taken credible actions to ensure data privacy and security and is transparent about its intentions around dynamic pricing.
"I know you probably think I am just another `tin foil hat lunatic' but the facts are the facts: [energy] savings can be achieved without smart meters, if [OG&E] uses education," our correspondent wrote. (I'm withholding our correspondent's name because he wrote me privately.) "[But] by `forcing the issue' they give folks no choice.
"OG&E stands firm that their [advanced metering infrastructure] system is the best and does not have issues that California and other states have encountered with their technology. Are we to take their word at that?
"Mr. Delaney, OG&E President, admitted in an interview on YouTube with the rep from their smart meter provider that the `initial offerings of the Smart Hours program will greatly help "condition"—he used that word—the consumer to be comfortable with the smart meter.
"However, when asked about demand-based pricing, [Delaney said] that it was `inevitable in the future.'
"As we speak, OG&E has a new rate case before the Oklahoma Corporation Commission already proposing rate hikes. They are also asking to add $3.50 a month [to residential bills] for several years to help `pay for the cost of rollout,' despite the $350,000 million dollars [sic] the Obama administration gave them to roll out this project.
"OG&E also has made promises of allowing consumers to `schedule' their [smart meter installation], so they can be `comfortable' with how the process works.
"Yet when I called the contractor doing the installs, I was told they were no longer doing appointments due to altercations with customers. So OG&E has no control over their contractor?
"I don't so much have a problem with the overall idea, I get it. But has no one ever heard of `you get more bees with sugar?'
"I am very frustrated that consumers no longer have any rights, and that we are forced into so many things in what is supposed to be a `free country.' The last word on this is: mandate. OG&E is mandating that its customers have smart meters, forcing us to pay for something we don't necessarily want. If it ain't a tax, they can't force it on us."
Dear correspondent, I wrote:
I understand your frustration. Indeed, one can manage electricity use and costs without smart meters. Demand response can be implemented without smart meters. But dynamic pricing, which rightly assigns the real cost of electricity on a 24-hour basis, which reflects the wholesale market, cannot be accomplished without the new meters.
OG&E's dynamic rates do depend on smart meters, both to send the price signal to every home (depending on your specific program) and to accurately bill for usage at off-peak and peak times. Further, the SmartHours program is opt-in, not mandatory. However, you appear to fear that what's voluntary today will become mandatory tomorrow. I understand your concern.
You appear to feel saddled by a regulated monopoly with no other options and might be more comfortable with a market that allowed competitive offerings. Your regulators need to hear from you.
I'd be guessing, but that $3.50 monthly charge likely covers 50 percent of the cost of OG&E's smart meter rollout paid by OG&E, not the 50 percent received from the stimulus funding by the Department of Energy.
The new meters do offer the utility many operating efficiencies, as well as enabling dynamic pricing. My personal position is that those efficiencies, not the customers, should then pay for the meters.
Dynamic pricing, however, (at least in theory) should delay huge capital investments in power plants that run only during the peak and, therefore, are an inefficient use of capital as well as adding significantly to emissions harmful to human health. That's a least-cost way to balance supply and demand. Regulators want to contain costs for consumers while approving technologies that might get us there.
However, many utilities are using the mantra that dynamic pricing and smart meters will enable us to understand our usage and, therefore, "save money." That's probably got to change, per your point that we already know how to do that.
Whether as individuals we agree, many states have passed energy efficiency mandates that require utilities to reduce overall electricity use and peak use to make the current, Rube Goldberg system work. It's not just the system, but it's the fact that folks such as you are conservative on a flat rate, but that only subsidizes those who demand high use during peak periods. So dynamic pricing should also bring fundamental fairness to the equation. These should be positive points for folks interested in containing costs for the utility and, therefore, ratepayers.
I'm afraid that in the interim, we're stuck with a rickety old system whereby a regulated monopoly puts hardware in and gets a fixed rate of return above costs, though the cultural changes for customers (getting used to more expensive, peak rates) can be jarring. And, despite utilities' efforts to keep it simple, it gets complicated.
As I've said here before, if a regulated monopoly doesn't offer transparency, confusion and suspicion can grow. We think the world of OG&E, but perhaps it needs to clarify what you're hearing and spell out precisely what it's trying to achieve and why certain costs are passed along to you. I'd be fairly confident that OG&E is trying to do that, but I certainly don't blame you if at first blush it doesn't appear to add up.
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