- U.S.New Expectations for Electricity Consumers Households and businesses, largely passive for decades, will have to be involved
- Dual electricity meters outside the Irvine, Calif., home of computer science professor Christa Lopes, who said the Irvine Smart Grid Demonstration project cut her electric bill to zero over one summer.
By REBECCA SMITH
Aug. 2, 2015 7:34 p.m. ET63 COMMENTS
For most of the last century, Americans have been passive consumers of electricity, paying whatever their utility charged for the juice to run their lights and appliances.
That would change under the new carbon rules that the Obama administration will be unveiling Monday, experts say. Utilities themselves would install more large solar farms and wind turbines, but that wouldn’t be enough to meet the goals for reducing greenhouse gases.
So households and businesses would have to become active participants in the electricity business, selling power from their own solar panels or collecting payments for cutting their electricity use when the grid is under stress. And consumers, with financial help from utilities, will need to replace old refrigerators and air conditioners with more efficient models.
How much the shift would cost Americans is the subject of fierce debate.
Supporters of the rule contend increased energy efficiency and falling costs for renewable generation would allow consumers to cut their bills, even as utilities pass along the costs of new power stations and the remaining debt payments on coal plants that will be closed.
But some utility executives said they are concerned about the costs to their customers. “If the implementation is too aggressive, you’ll waste a lot of capital trying to get things done quickly,” said Nick Akins, chief executive of American Electric Power Co., a big utility that serves 11 states.
Traditionally, the engineers who run the electric grid have turned first to the least-expensive power plants to meet consumer demand for electricity, then added more expensive generation as needed. But to satisfy the new rule, grid operators may choose instead to tap the least-polluting options first, which could increase costs to consumers.
Much will depend on the goals for specific states and how they decide to meet them. Louisiana, Arkansas and Texas, which may have to substantially cut carbon emissions from the power industry, may make different choices than states such as Kentucky, West Virginia and Indiana where targets are much lower.
California expects to exceed the federal mandate. Its utilities received 27% of their electricity from renewable sources in 2014, excluding hydropower, which in a year of normal rainfall could add substantially to the renewable-energy mix. The state’s aim is to get 33% of its power from clean sources by 2020 and it is considering increasing the goal to 50% further out.
Consumer technology will change, too.
“Where I think we’ll see a lot of work is on the software side,” saidTed Craver, chief executive of Edison International, parent of Southern California Edison. “Customers will have tools to manage their energy devices without having to fool around with a computer screen. It will all happen automatically.”
U.S. utilities already have installed more than 65 million smart meters that measure electricity consumption throughout the day.
“Things are moving so fast,” said Michael Picker, president of the California Public Utilities Commission. “Every executive I talk with says there’s been more change in the past five to seven years than in the last 100 years. And it will accelerate now.”
Managing demand for power could be a big deal in New York, where most of the time the grid needs just 54% of the electricity that power companies can produce, except on the highest-demand days. The state is looking for ways to flatten peak energy demand so the entire electric system could be sized more appropriately and waste could be eliminated.
Involving customers is key, said Gil Quiniones, chief executive of the New York Power Authority. Recently, he sent letters to 698 school districts in the state, offering help “if you’re interested in putting solar on your roof or school grounds.”
About a third of the districts are forging ahead with plans to go solar, he said, adding that he thinks they could gin up enough solar capacity to idle half a fossil-fuel plant.