Consumers and the ‘Smart Grid’

The drive to let consumer-level electricity prices float as prices do in innumerable other markets has been stunted by complaints about so-called "smart meters" that would give consumers the ability to respond to fluctuations in the realtime price of electricity.

When the California Energy Commission attempted to put these kinds of meters into new buildings, the knee-jerk reaction consisted largely of complaints about the government "taking over" consumers' electricity consumption in the case of a looming blackout. For more on why these concerns lacked some essential context, listen to the podcast with Peter Van Doren on the case of the CEC.

As I discussed with economist Lynne Kiesling at Cato University, consumer-side responses to varying electricity prices could take many forms, from smarter appliances plugged into the same pricing information to battery technology to take advantage of times of low electricity demand. What's more, dynamic pricing could someday let consumers turn the product of electricity into the service of electricity by allowing consumers to pay a premium for costlier but "greener" methods of electricity generation.

Here's more from Kiesling on smart meters.