Will Anger Over Rising Utility Rates Kill the SmartGrid Messenger?

Regulators and politicians have piled costs onto utilities to achieve their clean, green and on my watch agendas.  The cumulative impact of state renewable portfolio standards, spending for smart meters, investments in transmission and distribution upgrades to integrate renewable energy in the system, and ongoing capital expenditures was certain to raise utility rates.

The problem is ratepayers have been oblivious to what was happening—until now!

There is a tsunami of rising utility rates heading our way.  By some estimates electric rates could double over the next several years.  If natural gas prices return to their historic levels gas heating costs will spike as usual in cold weather adding to the misery index.

Here in California that tsunami is hitting.  The Fresno Bee carried a story about more than 100 people coming to a town hall meeting called by PG&E to educate consumers about the new smart meter technology PG&E is installing in their area.  Ratepayers in attendance wanted to hear none of that!

“The meters, in my opinion, are not very smart.”

That is what one customer told a state senator who came to get some good publicity from the ‘good news’ story of smart metering technology coming to Fresno.  But it didn’t quite work out that way.

According to the Fresno Bee reporter, Pablo Lopez, many PG&E customers brought their utility bills to complain about their skyrocketing costs.  Since the meeting was about smart meters that’s what they blamed for the cost increases.  The PG&E reps tried to explain that the billing increases were caused by summer heat and increased usage, but customers were having none of it.  When PG&E reps then told the crowd that the higher bills were the result of rate increases approved by the California Public Utility Commission in March 2009 you could have been trampled by the politicians heading for the door!

The other complaint even from customers who favored use of smart meters was that the part of the system that provides real-time information to customers about their energy use so they can make adjustments will not be in place for “years”.

You see what is coming, don’t you?

Use PG&E as an example.  This is a well managed utility that is at the forefront of smart metering technology, expansion of renewable energy in its portfolio and all the other things we say we want our utilities to do.  But we are beginning to get the utility bills to pay for these improvements—and we don’t like it.

PG&E has more than 9 million customers in California and about 1.7 million now have electric smart meters while 2.3 million have gas smart meters.  More than 78% of the Fresno senator’s customers now have smart meters so now he has a big problem too.

So by the end of the town meeting the senator was quoted by the Fresno Bee as saying:

“People don’t see the value in this program.  They just see higher cost, and that makes them angry.”

There was brisk business after the meeting with customers signing up for PG&E’s ‘budget plan’ which is a level billing plan to avoid rate spikes.  It does not lower the overall bill but it can help customers avoid surprises.  A growing share of utility customers use it, but guess what, no one told these ratepayers at the town hall meeting that the only way smart meters make sense is if the CPUC adopts real-time pricing and lets them feel the rate spikes so they use less energy to save money.

So what?

To borrow a phrase from a previous political disaster “the chickens are coming home to roost” and the consequence of the mostly (so far) state mandates for more renewable energy, more demand response, more energy efficiency, no coal, no new nuclear, no new hydropower and now smart meters is that our utility rates are programmed to double and may go even higher over the next few years.

The most visible factors for customers will be smart meters and renewable energy and the big risk for both utility and regulators is that public support for these programs could fall dramatically as the cost increases pile up.  The tsunami will continue and get worse for the politicians who are now so visibly supporting or demanding these programs when voters remember on Election Day 2010, 2012, 2014 and beyond when their opponents remind them that the senator from Fresno and elsewhere supported all these programs that raised your rates.

Moderation, people!  We need clean, renewable energy and a smarter more digitally proficient transmission grid to achieve our energy and environmental goals.  But the public will not support programs that come to be seen as unfair, unreasonably costly, and politically driven without also experiencing the tangible benefits they bring.

And when the tsunami hits the beach—or Fresno—those politicians that demand so much, so soon will be behind you——way behind you!