Smart Grid Technology, Now Spreading Across U.S., Will Raise Energy Prices to Reduce Demand

By Susan Jones | December 24, 2013 | 8:22am EST

A utility worker installs a "smart meter" that will interface with new smart grid technology. (AP Photo)

( – The Obama administration is spending billions of dollars to modernize the nation’s power grid, with the goal of changing the way Americans use energy. Your electric bill will go way up, unless you allow the utility to control your energy load at times of peak demand.

“Smart grid” technology involves a wireless, two-way flow of information between individual homes and the power plant. This allows the utility to charge more for electricity, depending on when it is used; and it enables the utility to manage energy for the consumer, to reduce the impact on the grid.

For example, customers eventually will be able to program their “smart” appliances and thermostats so the utility company can turn them off at times of peak electricity usage.

According to one consulting company, some utilities already are informing consumers about their carbon footprint alongside their energy costs.

That should come in handy if advocates of a carbon tax are successful in imposing one. People with big homes and big families would be expected to have larger carbon footprints than others.

The U.S. Agriculture Department recently announced it will spend $1.8 billion to improve electric service for 37,000 rural customers in 25 states and one territory – which works out to $48,648 for each of those 37,000 rural customers.

The project includes $45 million for the installation of “smart grid” technology.

The smart grid aims to reduce consumer demand for electricity at periods of peak usage, thereby making it unnecessary to build additional power plants, which take much of the blame for “climate change.”

“This funding is part of the Obama Administration's vision for a new rural energy economy and USDA's commitment to creating economic opportunity in rural America,” Agriculture Secretary Tom Vilsack said. “Investments in smart grid technologies will continue to modernize our nation's electric system and improve operational efficiencies."

The Agriculture Department is funding its new smart grid investments through its Rural Utilities Service Program. But the Energy Department is the lead agency when it comes to modernizing the power grid. In fact, under the 2009 stimulus law, $4.5 billion flowed to the Energy Department for grid modernization projects.

The Energy Department said the “expected benefits” of those stimulus projects include “reductions in peak and overall electricity demand” and “reductions in environmental emissions.”

By the end of 2014, thanks to various stimulus projects, the Energy Department expects 15.5 million advanced meters to be installed and operational across the country.

Those advanced meters – a key part of smart grid technology – allow power companies to measure a home’s energy use in 15-minute intervals, for example. The price signals are then sent to “smart” devices -- thermostats and smart appliances such as washer/dryers, and refrigerators, which are the home’s major energy-users.

At times of peak (expensive) power usage, the devices, programmed according to the consumer’s wishes, can be cycled off or on.

Here’s the scenario described in one Energy Department publication:

“Imagine that it is a blisteringly hot summer afternoon. With countless commercial and residential air conditioners cycling up to maximum, demand for electricity is being driven substantially higher, to its ‘peak.’ Without a greater ability to anticipate, without knowing precisely when demand will peak or how high it will go, grid operators and utilities must bring generation assets called peaker plants online to ensure reliability and meet peak demand.”

But the Energy Department says those peaker plants are expensive to operate because they use fuel bought on the more volatile “spot” market. And they generate additional greenhouse gases.

The Energy Department says a smarter grid makes it possible to reduce the high cost of meeting peak demand. “It gives grid operators far greater visibility into the system at a finer ‘granularity,’ enabling them to control loads in a way that minimizes the need for traditional peak capacity.”

“Simply by connecting to consumers – by means of the right price signals and smart appliances, for example – a smarter grid can reduce the need for some of that infrastructure while keeping electricity reliable and affordable.”

Whirlpool, the world’s largest manufacturer and marketer of major home appliances, has announced that it plans to make all of its electronically controlled appliances Smart Grid compatible by 2015, says a publication on the Energy Department website.

That same article says General Electric's smart appliances include a refrigerator, range, microwave, dishwasher and washer and dryer. As part of a pilot program, those appliances receive a signal from the utility company’s smart meter, which alerts the appliances – and the participants – when peak electrical usage and rates are in effect.

In the pilot program, the signal word “eco” comes up on the display screen. The appliances are programmed to avoid energy usage during that time or operate on a lower wattage; however, participants could choose to override the program.

Plug-in vehicles

Duke Energy, one of the nation’s large utilities, says the smart grid will let customers check their energy bills online without waiting for the monthly bill.

“Instead, you'll be able to monitor your previous day's usage and, if you want, modify the ways you and your family are using electricity to better control costs. How you use the information is completely up to you – and only you, since the new grid gives consumers, not utility companies or the government, more power over energy choices.”

Duke Energy says the smart grid “also has great potential to benefit our environment,” because lower consumer demand for electricity will reduce the need for additional power plants – which now fall under stringent EPA regulations.

Duke also notes that the smart grid “will enable the nationwide use of plug-in electric vehicles.”

Since 1982, growth in peak demand for electricity – driven by population growth, bigger houses, bigger TVs, more air conditioners and more computers – has exceeded transmission growth by almost 25% every year, the Energy Department says.

Since government clean-air regulations are crimping supply, the alternative is to reduce demand.

However, both the government and the utility companies are concerned about consumer acceptance of smart grid technology, including the installation of wireless meters that give a much clearer picture of a home’s energy use.

According to a Dec. 13 New York Times report:

Customers in California are in open revolt, and officials in Connecticut and Texas are questioning whether the rush to install meters benefits the public.

Some consumers argue that the meters are logging far more kilowatt hours than they believe they are using. And many find it unfair that they will begin to pay immediately for the new meters through higher rates, when the promised savings could be years away.

But the Energy Department touts consumer empowerment:

“Research indicates that consumers are ready to engage with the Smart Grid as long as their interface with the Smart Grid is simple, accessible and in no way interferes with how they live their lives,” says one smart grid explanation posted on the Energy Department’s website.

“Consumers are not interested in sitting around for an hour a day to change how their house uses energy; what they will do is spend two hours per year to set their comfort, price and environmental preferences – enabling collaboration with the grid to occur automatically on their behalf and saving money each time.

“At the residential level, Smart Grid must be simple, 'set-it-and-forget-it' technology, enabling consumers to easily adjust their own energy use.

"Equipped with rich, useful information, consumers can help manage load on-peak to save money and energy for themselves and, ultimately, all of us.”

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