Power company benefits

Smart meters have two main benefits to power companies: managing customers and managing peak demand.

Managing customers

Because smart systems "read" customers' meters every half an hour, monthly power bills can be more accurate and up to date. That means no more visits by the meter reader and no more estimated accounts.

Meridian says its smart-meter system will give customers improved billing accuracy and information, as well as providing more payment options such as pre-pay. It also says the time-of-day use graphs generated by the system can help customers make changes in energy use by pinpointing times of high usage.

These are worthwhile advantages - especially for people who are keen to reduce their consumption for environmental reasons or who currently have problems paying their bills.

Managing peak demand

The highest loading on the electricity system occurs during cold winter nights, when people are often simultaneously heating their houses and cooking their meals. For the system not to fail (and create blackouts) there must be enough supply infrastructure to cope with this peak demand.

But providing additional infrastructure that's used for only a few hours a day during winter is a very expensive investment for electricity companies. So limiting or reducing peak loads is an attractive option, because it reduces the amount of infrastructure they need.

Varying electricity pricing

Smart meters allow electricity companies to vary the price of electricity during the day. Meridian is not doing this at present, but the capability is there. If punitive peak-demand pricing is introduced, people will "switch off" - at least in part - and the load on the system will be reduced.

The power companies say consumers will benefit from smart meters by being able to adjust their electricity consumption to reflect time-of-day pricing. Sounds good - but the reality is somewhat different.

You arrive home at 6pm on a winter's evening after a long tiring day. The first thing you do is switch on the heat pump (or electric heater) and then you start to prepare dinner. The heat pump (while it's warming the house) uses significant amounts of electricity, as does the electric cooker.

The smart meter panel tells you that right now the price of electricity is exorbitant. But what option do you really have? Stay cold? Go hungry? At peak-demand times, consumers have little choice but to use the electricity they need - there and then.

If the peak price of electricity is made punitively high, no doubt some people will forgo being warm and will choose to cook at other times. We think this is counterproductive. New Zealand houses are already too cold and damp - and this is associated with our high rates of asthma and other respiratory diseases. The Ministry for the Environment is promoting a "Warm Homes Project" to increase the average winter temperature of New Zealand homes. We think the widespread introduction of smart meters with punitive peak-demand pricing is likely to have the opposite effect.

Is there a better way?

We think so. Most appliances are required at the specific time you need them. But for some appliances that chew through the power, delayed use could be possible - we're thinking clothes dryers and dishwashers here.

If the electricity rate after 11pm was around half the daytime rate, there'd be a price incentive to use night-rates for dishwashers and clothes dryers. Some consumers would certainly do this, which would have an effect on peak electricity demand. Day/night metering is already available in many areas and it doesn't require the introduction of smart meters.