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What if you could log on to your electric company's Web site to find out when power is cheapest so you could can plan your energy use accordingly?
That day might not be so far off. In some parts of the country, utilities have already begun to install so-called "smart meters" in people's homes. These devices record your energy use in frequent intervals (sometimes every 15 minutes), letting you know when you're using the most expensive electricity.
Smart metering is part of an increasingly popular trend in energy efficiency called "demand response" in which customers voluntarily cut back on their power consumption during times of highest electricity demand, like the hottest days of summer, when air conditioners are running at full blast.
Now lawmakers on Capitol Hill are looking to take this technology a step further in an effort to develop a "smart" electric grid for the entire country. This would help consumers save on their energy use, reduce the number of new power plants that need to be built, and provide more accurate information to grid operators about how to allocate electricity use.
A House of Representatives subcommittee chaired by Rep. Rick Boucher, D-Va., met Thursday to consider ways to implement a smart grid. Boucher hopes to use some of the committee's findings to help craft a new energy bill within the coming weeks.
In the U.S., California is unquestionably leading the way in smart meter installation. Within the last year, state regulators have approved smart meter programs for PG&E (nyse: PCG - news - people ) subsidiary Pacific Gas & Electric (amex: PCG.PR.A - news - people ) and San Diego Gas & Electric (amex: SDO.PR.A - news - people ), an affiliate of Sempra Energy (nyse: SRE - news - people ). Southern California Edison (amex: SCE.PR.B - news - people ) is also pioneering a new type of technology that will allow remote activation of smart meters. The company is awaiting approval from California regulators for the project.
Last year, Pepco Holdings (otcbb: PMLCP.OB - news - people ) announced a two-year pilot program for smart meters, which will give customers several different pricing options. And earlier this week, Constellation Energy Group (nyse: CEG - news - people ) said Maryland regulators have given the green light to a smart meter pilot for its subsidiary Baltimore Gas & Electric Co.
"A high-tech world can no longer afford a low-tech electricity grid," says Edison International (nyse: EIX - news - people ) Chairman John Bryson, who testified before the subcommittee Thursday. Because electronic equipment is increasingly sophisticated, standard meters--and the people who read them--are becoming obsolete. "Old power-delivery technologies are no longer good enough," he says.
Critics have argued that utilities are fleecing customers by ultimately charging them for the installation of smart meters, which can easily run $100 or more per household. And make no mistake, outfitting an entire customer base with state-of-the art technology is not cheap. For example, Southern California Edison plans to invest $1.2 billion in its smart meter project over the next several years. Pacific Gas & Electric will spend $1.7 billion to upgrade and install new meters between now and 2011.
But the benefits of such a program seem to outweigh the costs. In a "smart" grid, the meters allow the various information points to "talk" to each other, providing more transparent information to everyone connected to the grid. Because a consumer would be able to see when electricity prices are cheapest, he could decide that, say, 10 a.m. is the best time to do a load of laundry. Pricing information aside, utilities and grid operators could more accurately pinpoint the location of a problem in the electrical network--eliminating the need for repair crews to scramble for hours to determine where a power failure has occurred.
So why isn't everyone installing smart meters in homes and businesses? At the federal level, Congress doesn't have the power to mandate a nationwide smart metering program, and many states don't have the programs or the political will to foster such programs. And because the public is largely uneducated on smart metering and energy price fluctuations, there hasn't been much of a demand, says Robert Lieberman of the Illinois Commerce Commission.
"No one's going, 'Damn, I want one of those meters,' " he says.
Additionally, utilities and regulators are challenged with simultaneously putting in place metering programs and time-based prices, says Dan Delurey, executive director of the Demand Response and Advanced Metering Coalition here.
So what is Congress to do? Experts testifying Thursday encouraged lawmakers to provide financial incentives to utilities and states to encourage smart metering programs. They also stressed the need for standardization of the smart grid components, to avoid a patchwork of technologies across the country.
Although the country continues to grapple with rising oil prices and experiments with expensive ways to clean up coal, energy consumption can be significantly reduced through energy efficiency.
That's why it's important for Congress to get right the implementation of a smart grid the first time around.
As Brad Gammons, vice president of IBM's (nyse: IBM - news - people ) global energy and utility industry, told the subcommittee, "It will literally bring power to the people."
