What Would You Pay To Stay Cool?

Tuesday, August 21st, 2007

What Would You Pay To Stay Cool?:

Tucked in the massive energy bill passed by the U.S. House of Representatives Aug. 4 is a provision that uses $2.25 billion in matching grants to promote an energy-saving idea that appeals to both free marketers and environmentalists.

The idea: smart grid technology. In its simplest form, it lets your “smart” electric meter talk back to the utility and record your usage by hour, so you can adjust your habits to take advantage of lower, off-peak rates.

Maybe, for example, you ‘d be ready to put off running your dishwasher until 3 a.m. if you could do it with electricity that costs 5 cents a kilowatt hour, instead of 25 cents. (Today, most residential consumers pay a flat rate — a national average of 9 cents a kilowatt hour, though local rates vary widely.)
Will customer behavior really change? And how expensive must electricity be to spark a change? In a California test that ran from 2003 through 2005, the average customer reduced his usage by 13% during the hottest summer hours when rates were five times higher. Customers with smart thermostats reduced their usage by 27%, and customers with gateway systems, which adjust the electricity use of multiple appliances, reduced their usage by 43% during the peak hours.

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