Debate: Do Smart Meters Curb Energy Use?

It's said that information is power but could information mean less power, when it comes to electricity use? Environmentalists and makers of so-called smart meters are convinced that's the case. They say if consumers could see in real time how much power they're using, they'd conserve more. But some behavioral economists say no way. They say electricity is so cheap that real-time information might lead people to run their lights and gadgets even more.

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There are some things that many of us do not do, even though they would save us money, like switch to compact fluorescent light bulbs or buy a new energy efficient refrigerator, or just turn off the lights in an empty room. It's as if we like wasting money. Now, that's not true, of course, but it is a hard problem to fix. NPR's David Kestenbaum from our Planet Money team has more.

DAVID KESTENBAUM (Software Designer, Google): Dan Reicher thinks he knows the solution. Every family just needs to attach this little device to the fusebox in their house. His family did it a few months ago. The device is pretty simple. It just measures the amount of electricity used in the house. He can see the information on a meter in his kitchen or online.

Mr. DAN REICHER (Director of Climate Change and Energy Initiatives, Google Inc.): And every time I go to Google something or look at the weather or sports or the stocks, there sits my electricity use, in real time.

KESTENBAUM: Can you show me right now?

Mr. REICHER: Yeah. Let's see. I'll look back.

KESTENBAUM: I need to mention that Dan Reicher works for Google, which wrote the piece of software he's using. It's his job to show this stuff off. We met at the climate change talks in Copenhagen, where it was often pointed out that conservation, energy efficiency improvements, those are the easiest ways to begin to combat global warming.

Reicher thinks there's a simple reason we don't do these things: We lack information. On a laptop, he pulls up the information, a very detailed graph. You can see exactly when his family wakes up because the line goes up: The kids turn the lights on. His wife uses her hair dryer. Then there's this other huge spike.

Mr. REICHER: My six-year-old son saw this the other day, and it finally dawned on him. He was looking at our little meter, which normally is at 200 watts, and this thing shoots up to 1,800 watts. He says, daddy, look. And it was simply the toaster, you know, turning electrical energy into massive heat energy to singe this toast.

KESTENBAUM: Every bump or mountain on the chart was a mystery. And he found some easy things he could do to save money.

Mr. REICHER: I kept seeing this big spike, and I began to suspect it was my furnace. So I had my son go in the living room and turn the furnace off using the thermostat, and all of a sudden, within a couple of seconds, I saw this peak just drop precipitously.

KESTENBAUM: It turned out his furnace had a really old, inefficient motor, the thing that blows the heat around the house. So he replaced it. He also got a new refrigerator, which eventually will save him some money. Dan Riker was an assistant secretary at the Energy Department under President Clinton. He and people like him argue if we just had more information, we'll save money and we'll be better people and we'll help the environment.

Mr. REICHER: So at a very general level, we think knowledge is power. And, indeed, in this case, knowledge is less power.

KESTENBAUM: Oh, that was such a - who wrote that line? You wrote that line?

Mr. REICHER: You can send me to the pun-itentiary.

KESTENBAUM: It is true that right now, electricity is kind of a weird commodity. People just get their monthly bill. They don't know what is costing what.

Mr. REICHER: Imagine going into a grocery store and there were no prices on anything. You simply put it in your basket, and the end of the month, you got a bill, you know, pay $671.15. I don't think most people would stand for that.

KESTENBAUM: But there is debate about what effect these so-called smart meters would have. George Loewenstein is a behavioral economist at Carnegie Mellon University.

Professor GEORGE LOEWENSTEIN (Behavioral Economist, Carnegie Mellon University): In fact, some of the information that a smart meter would give you might actually worsen your behavior because, for example, electricity is really amazingly cheap. It's amazingly cheap to air-condition your whole house for a few hours. And if the smart meter is giving you objective information about how much it's costing you, you might be surprised at how cheap it is rather than surprised at how expensive it is.

KESTENBAUM: Loewenstein says there are a lot of tests going on right now to assess the effect of putting in different kinds of smart meters. Some will do the thinking for you.

Prof. LOEWENSTEIN: Like they shut down your air conditioning at a peak time. And there is some research showing that people are surprisingly willing to go along with something like that.

KESTENBAUM: And that may be the most productive approach, he says: let the machines make our economic decisions for us.

David Kestenbaum, NPR News.

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