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“Smart Meters”/Prepayment Meters: An Unwise Choice for Low-Income

“Smart Meters”/Prepayment Meters: An Unwise Choice for Low-Income. Presentation to Indiana Community Action Conference Presented by: Roger D. Colton Fisher, Sheehan & Colton Belmont, MA October 2008. What is a “smart meter”.

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“Smart Meters”/Prepayment Meters: An Unwise Choice for Low-Income

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  1. “Smart Meters”/Prepayment Meters:An Unwise Choice for Low-Income Presentation to Indiana Community Action Conference Presented by: Roger D. Colton Fisher, Sheehan & Colton Belmont, MA October 2008

  2. What is a “smart meter” “. . .a concept embracing two distinct elements: meters that use information and communications systems that can capture and transmit energy use information as it happens, or almost as it happens.” New York State Research and Development Authority (NYSERDA)

  3. The objectives of “smart meters” • “Real time pricing” • Assumes viability of “price signals” • “Demand response” strategies • Assumes capacity of consumer to respond to price signals

  4. Smart meters and rate impacts • Sharp increase in value of “rate base” • Substitute investment for companies that do not/cannot invest in power plants as they used to do. • Replacement of old (and depreciated] meters with new [and undepreciated] meters. • Continue to pay for remaining depreciation on old meters anyway. • Rapidly obsolete --quick depreciation • 30 year depreciation vs. 7 year depreciation • Akin to telecommunications equipment

  5. Costs beyond the cost of the meter: • Cost to accumulate data • Cost to archive data • Cost to access and process data

  6. Electric usage by income

  7. Central a/c’g use by income (cont’d)

  8. Low-income energy risks by risk attribute SOURCE: Roger Colton (March 2006). Georgia REACH Project Energize: Final Program Evaluation, Georgia Department of Human Resources: Atlanta (GA).

  9. Alternatives to smart meters • Inclining block rates • Seasonal rates • Direct load control • Baltimore Gas and Electric Energy Saver Switch • Florida Power & Lights: “On Call” program • Allegheny Power: programmable thermostat switch

  10. Recommendations: • Target to high usage with usage profile of peak contribution. • Costs to be paid by customers who take service that requires use of such meters. • Shall not require to install as condition of receiving basic service. • State regulators to find, after hearing that benefits exceed the costs.

  11. Recommendations (cont’d): • Proponents must test, and document, the impact on variety of residential customers • Housing type, usage profiles, income levels, demographic characteristics. • Must be completely voluntary, with no cost-shifting to nonparticipants or to those who use less than average consumption. • Must not make condition as a result of nonpayment or inability to pay.

  12. Prepayment meters:Payment troubles and low-income status • Census: 32.4% of LI behind vs. 9.8% non-LI • Similar state figures: • Indiana ( 40% 20%) • Iowa (25% / 12%) • Pennsylvania (40% / 15%)

  13. Prepayment meters:The narrowing of choices • Lack of payment plan option • Lack of short-term arrears option • NEADA surveys (2004 and 2005) • Medical care • Food • Home energy • Consumer debt

  14. Prepayment meters:Consider the working poor • 76 percent of workers in the bottom quartile of family income lack regular sick leave. • 58 percent of workers in bottom quartile do not have consistent vacation leave. • 78% of workers beneath the median income level cannot choose or change their starting and quitting times, or take days off to care for their sick children.

  15. Prepayment meters:The problem of hidden shutoffs • Rather than having a disconnect for non-payment, the meter simply runs out of money. • Great Britain: Nearly 4 million customers use prepayment meters. • One-third of gas customers self-disconnected. • More than one-quarter of electric customers self-disconnected. • Compare to 5% - 6% disconnect rate

  16. Prepayment meters: Salt River Project not a good comparison • 58% are homeowners • Average family income: $31,000 • Average family: 4 persons • Average customer: > 10 years

  17. Prepayment meters:Not good economic sense • Cost of meters: $7.50/mo x 12 mos = $90/year • Average savings: 10% x 7,000 kWh x $0.10/kWh = $70 • SRP savings only arose from aggressive energy education program.

  18. The fallacy of “consent”in the face of disconnection • Consent is vitiated by “duress” • One recognized cause of duress is “economic coercion” • Economic coercion occurs when consumer believes no real choice. • When duress is present, no “consent” can be found.

  19. Prepayment meters: The fallacy of the “price signal” • Don’t pay full bills with which to begin • Make payment trade-offs on a regular basis. • Programs such as LIHEAP destroy “price signals” • Programs such as budget billing destroy price signals • Assumes ability-to-pay—response to prices

  20. Summary of conclusions: Inappropriate to • Require utilities to install • Require customers to use • Allow installation unless cost-justified.

  21. For more information: http://www.fsconline.com News Library

  22. For more information: roger@fsconline.com

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