Smart regulation and new innovations through AMI could save consumers nearly $250 million a year in electricity costs
WASHINGTON (Oct. 26, 2020)—Over the past decade, utilities have invested billions of dollars in a data management and communications system known as Automated Meter Infrastructure, or AMI. With the proper investment and smart, market-oriented regulations, AMI has the potential to save residential consumers more than $250 million a year in electricity costs, help reduce their energy consumption and expand conservation efforts.
For example, if the AMI structures in California were configured to provide residential consumers price signals, the state could have more rapidly communicated and implemented the call for voluntary electricity conservation to residents when Gov. Gavin Newsom issued an emergency proclamation in September to help prevent rolling blackouts amid a historic heat wave.
In a new report released today, Michael Kagan explains how leveraging competitive electricity markets and smart regulations will unlock the true value of AMI—from enhanced systems and grid resiliency and flexibility to fostering further innovation—and pass savings on to consumers while also benefiting the environment.
“Such a deployment of AMI creates the potential for widespread availability of expanded service offerings by competitive retail suppliers and third parties, including smart home energy management, load control, usage alerts, outage notifications and time-varying pricing,” Kagan said.
“Competition benefits consumers by lowering costs and bringing innovation, but it can also be a safety valve to protect against corruption,” added R Street Senior Fellow Michael Haugh, who contributed to the report. “The recent energy scandals in Illinois and Ohio demonstrate that the current regulated utility model does not work or incentivize innovation.”
For example, most utility customers are currently billed under an average daily consumption pattern regardless of their actual usage. But with AMI, utilities could permit each customer to be billed based on their actual hourly usage, which would encourage competitive energy suppliers to offer products that reward consumers for responding to changes in energy prices.
As we approach full AMI deployment in the United States, regulators have a critical role to play in accelerating the pace of innovation and cultivating competitive markets that benefit all energy consumers, their pocketbooks and the environment.
Read the full report, “Leveraging Competitive Markets to Unlock the True Value of AMI” here.
