Interactive Energy Bill: Just Around the Corner?

The draft in Congress includes rebates for smart household appliances that link to the Web. Then makers must bring the machines to market

Internet-enabled refrigerators and other household appliances outfitted with enough computing intelligence to manage their own energy use have existed in corporate labs for years. If the climate and energy bill now being debated in Congress is passed, they may finally make it into your kitchen. Combined with deployment of other smart grid technologies, the result could be an interactive electricity bill that offers ratepayers unprecedented control over energy consumption and household expenses.

The draft energy bill introduced last week by Representatives Henry Waxman (D-Calif.), chairman of the House Committee on Energy & Commerce, and Edward Markey (D-Mass.), chairman of the House subcommittee on energy and environment, includes rebates for such appliances, incentives for retailers to sell them in large numbers, and a directive for the Energy Star program to incorporate smart appliances into its product labeling system.

These represent relatively small changes in the context of the proposal's cap-and-trade scheme and national renewable portfolio standard. But according to Michael Hindus, a Pillsbury Law partner and energy regulation expert, the carrots for smart appliance makers could provide the final push for an important piece of the smart grid puzzle to make its way out of labs, where smart appliances have languished—by and large since the dot-com boom—and into the mainstream.

The Push for Power Grid 2.0

Hindus, who spent 15 years as in-house counsel for California utility PG&E before joining Pillsbury more than a decade ago, says appliances capable of two-way communication (sending data to a utility about usage patterns and taking in data about real-time energy rates) and two-way control (allowing a utility to cut power use when demand strains supply) are "the essence of the smart grid." Yet white-box appliances have been largely absent from the smart-grid buzz in recent months.

President Barack Obama earlier this year called for the installation of 40 million smart meters and 3,000 miles of transmission lines under the economic stimulus package. His support for those installations comes as part of a larger push for Power Grid 2.0—turning the nation's 50-year-old electrical grid into a modern network that uses microprocessors and software to work more efficiently and incorporate more renewable energy—but we've heard no comparable rallying cry for Web-surfing washing machines.

Some manufacturers, however, have rallied anyway. General Electric, for example, predicted last fall that "within 10 years, energy management-enabled appliances could easily occupy the market space held by Energy Star products today." At the time, GE was kicking off a pilot program for a new line of smart appliances, so it seemed the outcome would depend on how smart appliances were priced and marketed, and on how much money they ended up saving consumers on electricity. All those caveats still hold, but the Energy Star labeling could boost marketing efforts, and the rebates could help with cost.

Engaging Consumers More

Of course, rebates and consumer education (the effect of those Energy Star labels) alone cannot spur mass adoption of smart appliances. As Hindus notes, momentum for a smarter grid has been "gathering steam" with each of the last two energy bills (in 2005 and 2007) and with the economic stimulus package passed earlier this year. But the focus has been on the utility side, not on customers. Manufacturers have been hesitant to sell these machines, Tang told us last fall, in part because customers have lacked easy access to energy management solutions and utilities have been unable to implement smart-meter and time-of-use pricing programs.

This latest proposal could involve consumers in a way Hindus likens to the Energy Dept.'s move to label refrigerators for energy efficiency, making it easy for shoppers to identify the most efficient models. (Energy Star-labeled fridges now use 40% less energy than the conventional models sold in 2001). When energy management devices with real-time information about energy costs make their way into our homes, Hindus said, "[It will be] the first time the consumer will see it," and as such, "the point at which people who don't pay attention to the smart grid will start realizing something is going on."

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