Guess who’s embracing energy “smart” meters?

Utility companies. So says the Wall Street Journal. Rebates are one popular approach for rewarding customers who cut back on their energy usage. Price discrimination – charging more at peak hours – is another.

Public Service Electric & Gas Co. gave 320 (New Jersey) customers advanced meters and special thermostats that let them control their heating and cooling much more precisely. Then the utility imposed high rates at certain times. The result: a dramatic 47% drop in usage among the test group.

Two participants, Bob and Helene Haney of Cherry Hill, N.J., say they not only reduced their household energy use at key times but also saved $350 in an 18-month period, cutting their utility expense by about 10%.

Under the program, the Haneys were charged high prices for electricity during the summers of 2006 and 2007 from 1 p.m. to 6 p.m. In addition, on up to five occasions each summer when the grid was especially stressed, the Haneys received an email alert from PSE&G. The utility told them it was imposing “critical peak” pricing the next day and would be charging $1.46 a kilowatt-hour from 1 p.m. to 6 p.m. instead of 23.7 cents. (Prices in the off-peak hours ranged from 3.7 cents to 8.7 cents a kilowatt-hour, less than the rate the Haneys paid before they joined the test.)

Mr. Haney, an engineer, says he set the family’s programmable thermostat so that the house temperature gradually would rise to about 80 degrees from 70 degrees by 6 p.m. on the critical days. The increase in temperature was so gradual, says Mrs. Haney, a retiree who cares for the couple’s grandchildren during the day, that “I didn’t notice any difference.” And once the need for conservation had passed, the thermostat dropped the temperature again.

Smart meter rollouts will get bigger. Pacific Gas & Electric plans to install 10.3 million advanced meters in California by 2011. Pepco plans to install 2.3 million in Maryland, Delaware, Washington D.C. and New Jersey by 2012.

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