Edison plan would put heat on business; 'Smart meters' will let utility raise peak usage rates.

Southern California Edison will soon start installing high-tech meters that would allow the utility to eventually charge all its customers higher electricity rates during summer peak hours--a prospect already drawing concern from business and consumer groups.

Edison, in a pilot program aimed at conserving energy, will install "smart meters" in about 5,000 homes, followed by more test meters that will be put into thousands of small-businesses early next year.

Pending final approval from the California Public Utilities Commission, the subsidiary of Rosemead based Edison International will then begin a $1.2 billion, five-year rollout of these meters for all of its 4.6 million residential and business customers.

The hope is that on hot days, when the power grid is stretched to the limit, customers can use the information and the prospect of higher peak usage rates to shift around power use. That would reduce the need for the utility to buy high-priced power from suppliers, as well as allow it to cut back on its iconic meter readers. Savings could reach $100 million over 20 years over and above the program's cost.

"By the time we fully roll this out, we expect to achieve about 1,000 megawatts of peak load reduction, which is the equivalent of one big power plant," said Paul DeMartini, director of Edison's advanced metering program.

Large industrial facilities such as oil refineries and major factories already have similar meters and are paying higher rates during peak times and lower variable rates during off hours. That allows them to theoretically reduce their overall energy costs if manufacturing and other processes are shifted.

However, extending the program is bound to be controversial, precisely because it's during hot days when smaller businesses, offices and residents, especially senior citizens, crank up their air conditioners--often the single biggest source of electricity consumption by these customers.

"The corner liquor store can't decide to turn off its refrigeration or freezer units when it gets hot and demand from customers is at its greatest, so they will be penalized if the price for that electricity all of a sudden doubles," said Mindy Splatt, spokeswoman for TURN, a group that acts as a consumer watchdog over the utilities business.

Raising thermostals

Unlike the traditional power meters that tell only how much electricity is used between monthly meter readings, these advanced meters give real time readouts of how much energy is being used every hour. They also contain two-way transmitters that would allow Edison power engineers to read meters from central offices instead of sending meter readers all over town.

The transmitters also could be used by Edison engineers to send signals to raise thermostat settings or turn off major appliances when the grid is overtaxed, though no plans for this exist at present.

Once the meters are in place, though, Edison expects to take the step of seeking PUC permission to charge more for power used during peak demand periods and less for energy used at other times.

Michael Shaw, legislative director of the California chapter of the National Federation of Independent Business, said his group will be watching to see how much Edison discounts non-peak usage, so businesses are not penalized under the new system.

"There will have to be a balance between higher rates for power used at peak times and lower rates for power used at other times. Otherwise, small business owners will suffer and we would oppose 'time of use' pricing," Shaw said.

In addition, TURN takes issue with assertions that the advanced meters save money. The group points out that ratepayers would pay the full burden for the rollout of the $1.2 billion program and it's possible all costs may not be recovered.

"We support programs that conserve energy and save consumers money. These meters do neither," said TURN executive director Bob Finkelstein, a group that acts as a consumer watchdog over the utilities business. "There are simpler, cheaper and more effective ways of reducing peak demand."

Finkelstein cited as one example air conditioning cycling programs where customers volunteer to have radio-controlled receivers placed on air conditioners that turn off or down the appliances when power usage spikes.

Charging higher rates during times of peak power demand has been talked about for years--especially after the 2000-01 power crisis--but until now has only been deployed at major industrial customers, in some cases for a decade.

Edison installed advanced meters and implemented "time of use" electricity pricing 10 years ago at two separate manufacturing facilities operated by Santa Fe Springs-based Trojan Battery Co. The company contends the meters have cut its electricity costs, though it will not disclose figures.

The electronic meter boxes are a massive 3 feet by 3 feet--far larger than the ones that would be installed in residences and small businesses--but are highly sophisticated. They are able to give power consumption readouts every 15 minutes, track the ampere hours used, the peak demand load and other usage patterns. They also have radio transmitters to send information to Edison engineers tracking power use on their grid.

"Without these advanced meters, you would only know how much electricity you use for the month. You might know what your peak use was, but not when it occurred. Now, we have the ability to run cost analyses with the advanced meters," said Chad Bentley, Trojan's manager of manufacturing technologies.

"If you know that running all your equipment at a certain time of the day will cost you more, then you can shift some of that to other times during the day," he added.

Race to deploy

Southern California Edison is actually a couple years behind in the race to deploy "smart meters." Pacific Gas and Electric Co., the utility subsidiary of San Francisco-based PG&E Corp., began its meter rollout in early 2006.

But Edison's DeMartini said that his company's meters are fully electronic, while Pacific Gas and Electric's meters are upgraded versions of the traditional dials.

The electronic meters have the ability to handle much more data and will ultimately allow for two-way communication. That would allow power engineers to turn up customers' thermostats, provided the customer gives advance permission, though DeMartini said Edison has no immediate plans to do this.

Like Edison, an estimated 7,000 large commercial industrial users in the city of Los Angeles have advanced meters that can track power consumption in 15-minute intervals. But for residential and small business customers, the DWP is going with a lower tech approach: installing conventional meters with radio frequency controls that allow for automatic reading. These meters allow DWP field workers to read them with hand-held devices or from a passing vehicle.

About 25,000 of these meters have been installed in the last four years: another 150,000 are set to be deployed to all residential and small business customers using less than 30 kilowatts at any given point in time, according to Gregory Black, manager of rates, contracts and automatic meter reading for the municipal utility. This five-year rollout is estimated to cost about $44 million.

BY HOWARD FINE 

Staff Reporter