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Pacific Gas and Electric Company

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The problems raised by the massive Pacific Gas & Electric smart grid installation in California will serve as a valuable lesson for other utilities around the world when they begin similar endeavors.  Utilities must ensure that customers understand how to fully utilize their new smart meters before they are installed.

PG&E’s smart meter installations in the Bakersfield area have caused an enormous backlash from customers – a class-action lawsuit has been filed representing thousands that will demand damages from the utility and third-parties also involved in the $2.2 billion project.

Bakersfield residents believe their new smart meters are malfunctioning because their bills are much higher than before.  PG&E claims higher bills are due to rate hikes, an unusually warm summer, and customers not shifting demand to off-peak times when rates are lower.

Andrew Tang, Senior Director, says the rate hikes were targeted at the upper tiers of power usage – specifically those who used more energy within the billing period.  Tang said these customers would pay $2.20 an hour to run an air conditioning unit. 

Bakersfield is located in the California desert and temperatures frequently hover around the century mark and never drop below 85 degrees (29.4 Celsius) on summer nights.  Obviously, Bakersfield residents depend heavily on their air conditioning for a suitable comfort level.  “I would hazard a guess that air conditioning is not optional,” offered Tang.

Industry experts believe variable pricing plans are necessary to get customers involved in energy conservation efforts during peak time periods when power is most expensive to produce.

PG&E will finish installing 10 million smart meters by the end of next year.  Currently there are no in-home energy management displays or dashboards accompanying the new smart meters.  Customers have no way to know how much their energy usage is costing in real time.  The utility does have plans to install these in the future.

Tang says that smart meters are “the enabling layer” to allow for the in-home energy management displays.  The utility mentioned in its original plans that there are incentives to install this technology for energy consumers.

Customers have never expressed concern about how they used energy before.  At flat rates they pay the same no matter when energy is used.  Customers that won’t, or can’t, adapt will pay higher bills as a result.

It is critically important to manage customer expectations regarding new smart grid technology.  A conference was held in San Mateo, California that focused on this subject.

Adrian Tuck, CEO of Tendril Networks, said that utilities have to change how they approach their customers with time-of-use (TOU) rates.  “A lot of times, the wrong question is asked,” he said at the conference.  He said that utilities must explain that shifting demand is critical or else new power plants will have to be built that will raise prices even further – or blackouts could occur once demand exceeds supply.

Utilities must also avoid waiting too long between installing smart meters and in-home energy management consoles.  “There’s a real risk here that the lag between the smart meter going in…and the in-home network that provides value to the consumer is so great that the consumer starts to feel disenfranchised,” said Tuck.

Scott Hublou, a VP at EcoFactor, said the best solution is one that consumers can “set and forget” so they don’t have to constantly monitor anything.  Appliance makers such as General Electric and Whirlpool are developing smart appliances capable of doing the monitoring on the behalf of their owners.

Pacific Gas & Electric
PO Box 56
Avila Beach, CA 93424-0056

5700 Flatiron Parkway
Suite 5700-D
Boulder, CO 80301


General Electric
3135 Easton Turnpike
Fairfield, CT 06828

2000 North M63
Benton Harbor, MI 49022


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