Your editorial is a very nice overview of what's going on in the United States for AMI. Of particular note is the growing trend within state and the federal governments to help utility companies adopt it.

I have a keen interest in the in-home side of AMI technology. It should be pretty obvious that the smart meter on a residential consumer's house can theoretically be used as a communication portal from the utility company through their AMI netork into the home, to a HAN network or specific appliances, or something as simple as a real-time in-home energy monitor.

Since utility companies want the best returns on their investments, they should look for and encourage technology vendors to provide the most universal gateway into the consumer's home that they can find. Smart meter radio networks in an AMI system are not designed to communicate directly with a multitude of applicances or devices in one house. Instead, the meters' radio networks can typiclaly only handle just one gateway device into the home, that acts as a relay from the home's smart meter to potentially many other network-enabled devices in the home.

Network-enabled devices and appliances technology for the home is already available to consumers, but they are not seen widespread throughout the public yet because their cost benefits are normally tough to justify by average consumers. However a connection to the home's electronic metering system has the potential to justify it, because it can enable energy use savings if applied as demand response technology for dynamic energy pricing.

A radio gateway device that is the only device allowed to communicate with the smart meter on the home could provide this function, by relaying messages from the utility to the other in-home devices if they exist. The dilemma for utility companies is that networked in-home devices do not for the most part exist yet in consumers homes, so providing a general purpose gateway to consumers would not be usable yet by most consumers.

However, a real-time in-home energy display device that also serves as a smart-meter gateway to other future in-home devices is a concept that would have immediate use for consumers. Real-time energy display monitors have been proven in study after study to promote sustained energy conservation with consumers.

Something for utility companies to strongly consider in their quest for adopting AMI.

Bob Amorosi

"Through May 2007, AMR meters are still out-shipping AMI meters. A number of utilities have recently announced plans to deploy AMI meters to replace not only electro-mechanical meters, but also replace previously installed AMR meters. "

Any utility or regulator group considering AMR re-metering needs to re-read that section as often as necessary to figure out that any metering system which is not at least a re-usable element of a bi-directional short-interval metering system with capability to communicate continuously with the customers appliances is a waste of money, very near-term. There is no longer any excuse for making that error.

Addendum to my Nov. 15th comments - There are many examples of technologies that consumers would want and would embrace with their purchasing power, like for instance HAN network technolgy, or real-time in-home energy display monitors. But often government policies and regulations are needed to encourage them or in some cases even permit the commercialization of them.

Ontario's massive public spending on promoting energy conservation has been helping Ontario consumers over the last few years to purchase energy efficient products, like new appliances, compact fluorescent light bulbs, appliance timers, etc. Without these government incentives, the take up by consumers of these products would probably be considerably less even though they are commercially available.

Ontario government utility industry regulation changes are now forcing all utility companies in Ontario to switch to AMI systems, for all 5 million residential consumers in the province by 2010.

Consider for a moment the reasons why consumers might want real-time in-home energy display technology. Mr. Steve Maxwell, technical editor for Canadian Home Magazine, has written on this subject in a Nov. 10th newspaper column, shedding further light on what I am describing. He writes:

"Imagine for a moment that gas stations everywhere changed the way they did business. Imagine gas pumps with no numbers indicating how much fuel you've bought and how much it costs. You simply fill your tank and drive away without paying. One big, nonitemized fuel bill arrives in the mail at the end of each month.

Would anyone put up with this? Not a chance.

Most of us demand to know how much our individual buying choices cost, yet this has never been possible when it comes to electricity.

Every time you turn on the lights or the dryer or a kettle, you're completing a retail transaction for electrical energy. Trouble is, without the right equipment, you're buying blind.

How much does it cost to dry a load of laundry? Or bake a cake? Or fire up a portable heater?...

The point .... is to close the information gap between our hands grabbing for electrical switches and the effect these actions have on our pocket book -- and the environment, and the generating system, and the grid ... "

Commercializing the "right equipment" for answering these consumer questions will likely require government involvement, by changing their utility industry regulations and providing consumer incentives to help adopt it.

Utility companies might want to strongly consider lobbying their regulators and governments in the United States to help them adopt AMI, and help consumers adopt the in-home technology side of it.

Bob Amorosi

I like your last comment also. Your comparison to "the un-itemized gasoline bill arriving in the mail next month" is dead on.

As gasoline is a known commodity and electricity only a potential commodity, gasoline price formation before storage vs. electricity price without storage is a good theme for discussion, before going any further with the analogy.

In the mean time, and before answering any more questions about EWPC, I have paused to see if I get any answers to the article Does EWPC have a “Bystander Problem”? Please wait!

Best regards,

José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: electricty

Electricity pricing is a very political subject. In Canada our provincial governments historically have rigidly controlled fixed pricing for residential consumers, changing them only once or twice a year. But large industrial consumers have for a long time paid variable wholesale prices for electricity.

The move to AMI systems in Ontario is motivated in part to implement Time-Of-Uuse pricing for residential consumers, with the option of implementing critical peak pricing when the grid and generating systems are strained. Reading between the lines here - this is closer to wholesale variable pricing for residential consumers.

Even if the TOU prices in AMI systems stay fixed each and every day, as is the plan in Ontario, average residential consumers STILL will not have the ability / capacity / time to know or calculate exactly how much they are using hence paying for each applicance or electrical load in their home.

Bob Amorosi

I will engage you latter. Your comment is very illuminating. I will show that the storage issue is very important fo increase the efficiency of the use of energy and to make it less political.

Best regards,

José Antonio

Len wrote elsewhere the following which you could comment with repect to the analogy between gas and electricity.

Jose: Exactly how does "Exposing ALL customers to real time prices is the recipe for unreliable service and price spikes. " work? Why are 1 million customers agregated electronically any different than the same 1 million customers agregated by a few retailers? I agree that exposing them to real-time prices may potentially present them with increased price variation, but the net result at the end of any billing period will BY DEFINITION (no retailer marketing costs, contract management costs, profit margins) be lower than what they must pay retailers unless there is illegal activity going on in the market, which IMEUC inherintly provides auditors to police.

Wholesale electricity prices from the generation system are set by supply and demand, such that when demand is near or at peak generating capacity, the prices from generators spike upwards very dramaticly. In Ontario for example, our generating capacity is insufficient to meet peak demand on a hot summer afternoon when everyone's air conditioners are running full blast, and in this situation the province is forced to import power from neighbouring provinces and from New York and Michigan. During these "critical peaks" in demand, the price the province pays for power domestically and from imports is at a steep premium.

Theoretically, if every consumer including residential consumers were paying variable "real-time" wholesale prices, then the price spikes during critical peak periods should encourage many consumers to respoond by cutting back on demand, also known as "demand response", be it manual or automated in some way. Cutbacks in demand in turn would lower prices until an equilibrium is attained between demand and pricing. But, as any electical engineer can tell you, this is analagous to a feedback control system where it can either reach a stable equilibrium, or it can instead oscillate in an unstable fashion, with greater peaks and valleys in price and potentially an unstable supply.

Len is therefore correct in stating that exposing all consumers to "real-time" price variations by agregating all consumers electronically (I assume) can potentially result in greater price variations in the case of an unstable system. Alternatively agregating consumers into different retailers on the other hand would shield consumers from variable "real-time" price variations - since normally retailers make their money by offering high fixed pricing regardless of varying wholesale prices. Agregating consumers by retailers who sell fixed prices to consumers can therefore reduce the chances of price instability and the resulting potentially unstable supply.

On the other hand any retailers, if they exist, that offered real-time variable prices would make no difference on price and supply stability.

This is my interpretation, correct me if I'm wrong.

Bob Amorosi

Ken

The purpose of real-time feedback of energy use and energy cost to a consumer is actually two-fold.

First is to educate consumers on the relative amounts they are using on the different electrical loads in their home and how much they are spending on each. Many average consumers presently have little no idea how much energy they use and spend on their home's appliances. But they would probably like to know, at the very least to make more informed decisions on their energy use habits, especially if they have an interest in practising conservation or saving money.

Secondly, as discovered in study after study, a consumer having their running energy bill in their face every day promotes energy conservation. In large populations equipped with real-time feedback, Hydro One and other utility companies in Ontario have accumulated statistics that demonstrate sustained energy-use curtailment, on average by 10%. Those consumers with deep pockets may not wish to curtail their usage at all, but others have been seen to cut back by as much as 20%.

Bob Amorosi

Similarly, they have little financial interest in changing the way they currently do business - that is to give consumers nonitemized total energy bills at the end of each billing period without real-time feedback to consumers.

The electricity industry has historicly been heavily regulated by governments, and to a great extent still is in Ontario. It typically requires government action or incentives to promote conservation or facilitate technology change within utility companies or residential consumers. The AMI (smart meter) systems currently being widely deployed by utilities throughout Ontario would never have happened without the Ontario government legislating them to do so by 2010.

Bob Amorosi

So far, more than 100 views are reported on the article Does EWPC have a “Bystander Problem”? (Please hit link here and further down to get more details) no comment other than Len Gould has been added. It seems that EWPC and this article (except for Bob and Len) have the bystander problem even after being viewed 1500 times.

On 11.23.07, above, I wrote that “I will show that the storage issue is very important to increase the efficiency of the use of energy and to make it less political.”

Energy price formation is systemic. Systemic means it depends on system structure. The original Vertically Integrated Utilities paradigm system structure is what led to “…One big, no itemized … bill [that] arrives in the mail at the end of each month.”

Under the VIU system structure, demand was an externality. Now FERC is trying to integrate demand to power system planning, operation and control, to increase the efficiency of electricity use. The article Demand Integration is NOT the Province of Politics treats the missing demand response (efficient rationing) part of FERC's staff assessment on Bill’s article. It explains how electricity without storage is made reliable, but still subject to rationing.

Energy prices increase as supply capacity reserves decrease at a given location. Short run supply vs. demand imbalances of gasoline are dealt by storage. Short run supply vs. demand imbalances of electricity are dealt by system reliability. Reliability is not cheap. The analogy of electricity to gasoline is thus incomplete, as reporting requirements of demand response need to integrated by retailers (regulated or unregulated) at the long run planning stage.

It is the need of system reliability that makes the need for Second Generation Retailer - 2GR to optimize customers’ interdependent investments and to bridge the retail market with the wholesale market. Potential innovations, such as the Zigbee options board made by 4C Energy Solutions will have much more opportunities and sooner in the global market under EWPC than under todays slow political market architecture and design paradigm.

In the section "using consumers as innovators," Manyika, Roberts and Sprague, in The McKinsey Quaterly article "Eight Business Technology Trends to watch," advise "... a company open to allowing customers to help it innovate must ensure that it isn't unduly influenced by information gleaned from a vocal minority."

EWPC is available for companies willing to innovate. Don't be "unduly influenced by information gleaned from a vocal minority," like Mr. G.