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The First Smart Grid Controversy?

The aim of the two plans is to encourage consumers to save energy and hence reduce their energy bills

Like any new technology, the emergence of smart grids has not managed to avoid some kind of controversy. There doesn’t seem to be anything wrong with the technology per se, but all the benefits of a smart grid and smart meter deployment is enabling a new set of business models (read charging models) that not everyone is happy about.

According to this article in the Boston Globe and nicely summarized in this blog post by EcoEquilibrium, one US utility’s proposed pricing plan is hitting some raw nerves with both users and commentators.

On paper, the suggested pricing plan sounds exactly like the kind of plan that takes advantage of the capabilities of a smart grid. The utility in question, Western Massachusetts Electric Co., is proposed two distinct plans - a pre-paid plan in which customers will pay up front for electric and be informed of what they are using, and a second, which features a lower price (6 cents) for the first 300 kilowatts of usage, and a higher price (20 cents) for subsequent watts. According to the report, the average price being paid right now is 14 cents and the typical monthly usage per customer is 500 kilowatts.

According to the reports, the aim of the two plans is to encourage consumers to save energy and hence reduce their energy bills.

It all sounds good until the authors point out that the proposed scheme is for low-income homes, and that the actual threshold for the lower per kilowatt rate is only intended for what the Globe articles describes as the bare necessities of “clothes washing, water heating, cooking, refrigerators and freezers.” Also, the authors point out that the prepaid option now opens up the risk of low income families having their power cut off when their credit runs out, potentially bypassing existing regulatory protection afforded to them against such an act by utilities.

Theoretically, such plans should work because users who use less energy will benefit. But it is like the proposal by Internet companies in the US to meter Internet access - in theory, those who use less pay less - but that hasn’t exactly gotten widespread support either.

This controversy certainly casts a shadow on the smart grid party and will no doubt have to be resolved as the world adopts increasingly smart infrastructure for power, communications and even transportation in the case of meter roads.

Read the original blog entry...

More Stories By Tony Chan

Tony Chan is the founder of the Green Telecom Live website and a seasoned journalist based in Hong Kong. He is currently an editor at CommsDay International, a daily, subscription-based newsletter covering the business, technology, regulation and market developments of the telecommunications industry in Asia and the world.