Texas capitalizes on smart meter investment
- June 25, 2015
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By Wannie Park
The Lone Star state is known for many things, including a fierce independent spirit, a die-hard commitment to football, and, as of late, leadership in smart grid technology.
Texas has a legacy of pioneering smart grid initiatives. Since 2007, Texas has installed over seven million smart meters, an achievement that helped it rank first on GridWise Alliance’s “2013 Grid Modernization Index” (tied with California, a state also thought of for its forward-thinking energy policy). Texas was one of the first states to invest in an online portal for residents to access their energy data, regardless of their electric utility. Texas also built its smart grid to enable the home area network (HAN) to connect to smart meter data, laying the critical groundwork for energy management tools like smart thermostats and smart appliances.
A new program aimed at low-income Texans adds to this legacy of smart grid leadership. From the start, the Texas Public Utility Commission recognized that low-income residents stood to gain the most from smart meters. Better insight into home energy use translates to more opportunity to reduce energy and cut bills. And while saving ten or twenty dollars on your energy bill may not sound like a lot, for low-income families it can put another meal on the table.
Yet while low-income customers stand to benefit most from energy savings tools that connect to the smart meter like in-home energy monitors and smart thermostats, they are also least likely to be able to afford them.
Energy efficiency in Texas? Believe it.
As part of its state-wide commitment to help low-income residents reduce energy bills—through a program called LITE-UP Texas—the Texas PUC made a unique choice. On top of cutting bills by up to 80%, the PUC also allocated $18.5M towards forward-thinking energy efficiency programs.
Because Texas is a deregulated state, energy providers typically aren’t incentivized to promote EE programs—after all, the more energy they sell, the more money they make. This program turned that model on its head to motivate Texas utilities to promote persistent energy savings for those who need it most.
This funding enabled Texas retail electricity providers (REPs) to provide energy displays, training and education to low-income customers at no cost. Customers are eligible if they receive Medicaid or food stamps, or if their household income is at or below 125% of federal poverty guidelines.
In-home displays can link the smart meter to the HAN to present real-time energy data to residents, right on the kitchen table. This new technology was recognized early on by the Texas PUC as a critical tool for low-income residents. Thanks to a dynamic interface and helpful, immediate data, people can finally understand the link between their behavior and energy use—and make real, lasting change.
Programs promoting in-home displays can go a long way towards helping low-income families make ends meet. Incredibly, studies estimate that the average American family’s expenditures on energy (including gasoline) have increased by 33% since 2001, while average pre-tax income declined by 6%.1 Energy efficiency programs give customers tools to make long-term reductions to their energy bills and bridge that gap.
Moreover, low-income residents are far more likely to spend their savings on goods and services than higher income residents, who are more likely to save. This multiplier effect provides an additional bump to the Texas economy.
These devices also bring important benefits to REPs. By providing intelligence about their customer base, HAN-connected displays can help electricity providers segment customers based on usage and target programs towards the biggest energy users. For example, REPs can use in-home displays to more effectively implement demand response programs by targeting their heaviest—and most responsive—customers.
Critically, these displays have been shown to engage customers more effectively than any other technology and can play a key role in helping REPs differentiate themselves in a fiercely competitive marketplace.
In September 2014, the PUC finalized a plan to reimburse REPs for providing in-home devices to low-income customers. Today, several forward-thinking REPs have already started to take advantage of the funding to implement proven energy efficiency tools.
Oncor has allocated $10M and CenterPoint has allocated $7.5M to distribute in-home displays to low-income customers, and early results are promising. A study that looked at the results of a pilot rollout of in-home displays for Oncor and Centerpoint customers found that the displays reduced energy use an average of 9 percent – putting a major dent in a low-income family’s budget. A whopping 80% of respondents said they changed how they used energy, while 57% reported checking the display daily.
On the clock: powering business, helping low-income Texans
During the most recent session, Texas lawmakers voted to discontinue the energy efficiency fund when depleted in 2016. Despite its initial leadership, Texas risks falling behind if it doesn’t continue to capitalize on its smart meter investment. Already, Texas has fallen to the bottom third of states for energy efficiency policies and programs, according to ACEEE’s Energy Efficiency Scorecard.
For low-income families, the good news is that the value of real-time energy data should extend beyond 2016. With insights about their energy use, customers know how to make ongoing behavior changes to reduce bills over the long haul. As Frank Wilson, the manager of new program participant NEC Retail, recently commented, “We see the in-home displays as a key tool to help members understand their usage and take action to reduce their bills over the long term.”
The LITE-UP Texas program is an impressive new chapter in Texas’s smart grid leadership. Now it’s up to REPs to seize this unique opportunity to further their business while helping low-income Texans—before time runs out.