Unlocking the potential for efficiency and demand response through advanced metering

Reliance on the standard cumulative kilowatt-hour meter substantially compromises energy efficiency and demand response programs. Without advanced metering, utilities cannot support time-differentiated rates or collect the detailed customer usage information necessary to (1) educate the customer to the economic value of efficiency and demand response options, or (2) distribute load management incentives proportional to customer contribution. These deficiencies prevent the customer feedback mechanisms that would otherwise encourage economically sound demand-side investments and behaviors. Thus, the inability to collect or properly price electricity usage handicaps the success of almost all efficiency and demand response options.

Historically, implementation of the advanced metering infrastructure (AMI) necessary for the successful efficiency and demand response programs has been prevented by inadequate cost-benefit analyses. A recent California effort has produced an expanded cost-effectiveness methodology for AMI that introduces previously excluded benefits. In addition to utility-centric costs and benefits, the new model includes qualitative and quantitative costs and benefits that accrue to both customers and society.