Con Edison is expanding its hourly pricing plan in New York City to include hundreds of additional buildings. The program, called mandatory hourly pricing, was introduced in 200 to only the largest of the city’s buildings. By in May 2011, any building that consumes up to 500 kilowatts a month will be eligible. In general, that includes buildings at least eight stories tall. Building owners that want to participate are required to pay $100 for ConEd to install a smart meter.

So far, the response to ConEd’s hourly rate plan has been tepidly received, with only a handful of eligible building owners participating. According to ConEd spokesman Bob McGee, 100 out of an eligible 790 buildings currently use smart meters. However, of the 1200 additional buildings that will be eligible in May 2011, 330 have already signed up.

Edward M. Fallon, president of the Building Owners and Managers Association of Greater New York argues that smart meters don’t make sense for New Yorkers. Most BOMA members utilize fixed-rate contracts from third parties, known as energy services companies, or ESCOs, that hedge against spikes in the price of power.

Using ESCOs can also save four to five percent on electricity transmission costs. New York state offers tax breaks on ESCO contracts to encourage competition among electricity providers. Since New York deregulated the electricity industry a decade ago Con Ed has focused on delivering power, not generating it so the majority of the power it delivers is set at rates negotiated with the state Public Service Commission.

BOMA’s Fallon agrees with those who suspect New York is pressuring Con Ed to offer the smart meter program but has failed to ensure the utility had an effective marketing plan. “I’m not sure Con Ed has marketed this as well as they could,” he says. “Maybe they didn’t really want to do it.”

Con Ed spokesman Mr. McGee disagreed. “Con Edison fully agrees with the P.S.C.’s conclusion that accurate price signals will lead to reduced peak usage, which will, in turn, mitigate peak-period prices, increase peak-period reliability and reduce New York state’s dependence on natural gas-fueled generation, as well as greenhouse gas emissions.”

Despite the current wariness energy experts and property owners alike agree that smart meters and the resultant hourly pricing plans will come to dominate the market. Anthony E. Malkin, president of Malkin Properties which owns the Empire State Building, says, “The mere fact that this option is being marketed is a tremendous change. Variable cost will get people to think a lot more about varying demand.”

 

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