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Your Electricity Costs – Get ready for the “Smart Meter”

light-moneyMany electric companies are radically changing the way your use of electricity is measured. Instead of the old fashioned mechanical meter with the spinning dial, plans are to plug you into an Advanced Metering Infrastructure that has at its core something called a “smart meter.”

These devices are electronic rather than mechanical, and provide for the real-time collection of usage data in the home. The meters also contain communication capabilities that allow information to be transferred from the home to the utility and vice versa, either in real time or according to a schedule.

This is good news for the consumer.

Your monthly energy costs are a large portion of your household budget. Ratepayers often look at their energy bills with a feeling of helplessness, attributing the costs to “just the way it is.”

Conversely, industry trade groups have for years touted the fact that energy—particularly electricity—is relatively inexpensive compared to the rate of growth in areas like food, gasoline, and medical costs. For example, Edison Electric Institute (EEI) reports that retail electricity prices grew at an average annual rate of 1.1% during 1985-2000, well below the general rate of inflation. Since 2000, electricity rates have been growing at 2.5% per year, but that’s still only slightly higher than the general rate of inflation since that point. But a glance at your electric bill shows costs going up.

EEI, in a report titled “Rising Electric Costs: A challenge for consumers, regulators, and utilities,” put it this way: “While electric utilities make continuous efficiency improvements…, the bottom line is that rising costs are becoming inevitable throughout the United States.”

Enter the Smart Meter; utility companies indicate that the “smart meter” can help lessen the impact of rising electricity costs in a number of ways. It gives the consumer the ability to control their electricity costs by using energy at the most affordable times. You will be able to sign up for real-time pricing, which would enable a homeowner to set parameters when, and at what price, electricity would be used (electricity is cheaper at certain times of the day, when the power grid is not as busy).

Along this same line, the “smart meter” would enable the collection and display of device-level energy consumption information. Following the adage that “you need to be able to measure it in order to manage it,” simply knowing what each appliance is consuming will allow homeowners to change their usage patterns, moving high-use items like dishwashers, clothes dryers, etc. to lower pricing periods, avoiding periods of peak prices.

It will take some getting used to, but utilities are confident that the “smart meter” can go a long way toward helping their customers help themselves.

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