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“In the last 50 years, electricity prices have been flat — in the next 10 to 30, the price of electricity is going to rise,” said Duke Energy CEO Jim Rogers in conversation with Matter Network’s John Gartner at GreenBeat 2009 this evening. “This is going to lead to a lot of frustration from consumers and political reactions,” he continues. The key, he says, is how utilities, their customers and governments respond to this increase.
Duke, for instance, is already putting incentives in place, anticipating this shift. Rogers used his talk to stump for his company’s Save-A-Watt program — a proposal that is not quite decoupling (separating utility revenue from the amount of power they deliver) but rather providing financial incentives to both utilities and ratepayers for conserving energy. So far the plan has only been approved in Ohio, only one of a handful of states that Duke serves, though Rogers says that win will soon be a catalyst for others. This model, he believes, will help energy utilities and customers weather upheavals and price hikes in the US energy mix.
Save-A-Watt is superior to outright decoupling, he says, because the latter will no doubt lead to utility apathy — bad for the environment and equally tough on customers’ wallets. “Greatness is never a consequence of indifference,” he said. The one positive side effect from decoupling will be varying power rates, he said — people should start seeing energy prices being more closely pegged to time of day and demand rates. This is something both Rogers and Duke supports.
In addition to responding to money consumer behavior can also be shaped by convenience, he pointed out. There are two schools of thought on how to encourage conservation at the consumer level, he explained: one says you can reinforce new patterns with the right mix of technology and enforcement, the other says you can do it without the consumer even really knowing — meaning no change in their daily lives.
A prime example of this is installing refrigerators programmed to make ice only during off-peak times, when energy is cheapest. The ice is still there, regardless of whether it was frozen at 3 p.m. or 3 a.m. — that’s all the customer cares about. In reality their energy use has changed, without them actually changing. Rogers stressed that this is the path to victory.
For this reason, Duke is getting involved in every segment of the Smart Grid’s supply chain. The utility has teamed with companies like Echelon and Ambient to provide cutting-edge communication systems for its smart meters (the goal being to deliver energy use data in real time to both utilities and the customers themselves in an actionable format). Rogers went as far as to say the company would build its own software if that was necessary to improve and speed the transmission of helpful data.
“We have the ability to optimize technology against the mother grid,” he said. “That’s where there are savings that will make the grid and our economy more efficient — optimization of homes on the mother grid is what will create transformation.” He said Duke is bringing in all the experts it can to make sure this happens — and fast. Rogers seems to be all about speed. When his team tells him a smart metering roll out will take three years, he asks why it can’t be done in one.
“The scaling aspect is really critical,” he says. “I want to close that gap — I want people to see it, feel it, touch it — there’s a sense of urgency because we’re making significant investments in this area.”
Rogers predicts that Duke will have smart meters rolled out to its entire coverage area with an automated distribution in place within five or six years.
He added that the company is looking for innovative ways to shrink its own footprint while its at it — promising to convert its full fleet of vehicles to electric cars and plug-in hybrids between 2010 and 2020.
VentureBeat is hosting GreenBeat, the seminal executive conference on the Smart Grid, today and tomorrow, Nov. 18-19, featuring keynotes from Nobel Prize winner Al Gore and Kleiner Perkins’ John Doerr. Register for your ticket today at GreenBeat2009.com.
[Photo credit: Alexa Lee]