Texas, the United Kingdom and other jurisdictions where the power market has been opened to retailers assert that the market system lowers power prices.
But these markets are also masking inefficiencies.
The Galvin Electricity Initiative, an organization founded by former Motorola chief Bob Galvin for improving the grid, has rolled out what it calls the Perfect Power Seal of Approval program to rate the various smart grid and efficiency initiatives underway at various utilities. The organization looks at four categories of characteristics -- reliability, consumer empowerment, efficiency/environment and cost -- of a smart grid initiative and then assigns a grade (from zero to 100) to how well it works. Utilities can have all four characteristics rated and shoot for a perfect 400 or ask Galvin to look at one or two.
The program has been in soft launch but now will expand.
Does it work? One of the interesting findings so far is that dynamic pricing certainly could help lower power prices. Even in jurisdictions with electricity retailing, Galvin has seen examples where the retail price of power and the dynamic price differs by 25 percent to 30 percent, according to John Kelly, the deputy director of the initiative, with the retail price being the higher one. Power providers that offer dynamic and/or real time pricing, naturally, earn points under the program.
Offering the opportunity for lower power bills through dynamic pricing options, of course, would also finally allow utilities to show why smart meters -- and all of their related smart grid activities -- are worthwhile. Recently, our grid reporter Katie Tweed trolled through the options for buying power in Texas. The conclusion? Although power prices have declined by 13 percent to 17 percent in the Lone Star State since 2002, the current programs from power retailers don't differ that much, and few take substantial advantage of smart meters.
Ratings like this could become more important as deregulation and retailing spread. (Dynamic pricing will be a big topic at Greentech Media's Networked Grid taking place May 3 and 4.) Illinois is currently promoting deregulation, said Kelly. The state has also created an option where cities can vote to become power purchasers on behalf of their residents. The idea is to use the heft and buying power of the city to get a better deal. Information like this can only help determine the true cost of what they're buying.