http://money.cnn.com/2007/02/27/news/economy/smart_meters/index.htm?postversion=2007022715
Peak minutes: Buying electricity like phone service
This article discusses the introduction of the new 'smart' meter- a different way to control electricity usage. 'Smart' meters allow customers to see how much they are paying for electricity at certain hours of the day and let them choose when to turn the electricity on or off. It's as easy as setting your spending limit to 20 cents a kilowatt hour for your air conditioning during the day, and having the meter shut when the cost for AC hits 21 cents.
"The hope is the customer will respond to actually seeing the [higher] price," said Kevin Wood, a manager at SCE.
After reading this article I think that this type of control over an elastic good like electricity could be seen as a positive externality. The article points out several benefits of using the 'smart' meter. By being able to have these meters automatically shut off appliances it will lower demand and help prevent pollution. Since people can control how often and how long their appliances run throughout the day, they will also be able to lower their electricity bills and save money. Even though a 'smart' meter is about three times more expensive as a regular meter, I think all of these benefits are worth it. Consumers will be saving money in the long run.
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3 comments:
As Ellen said in the article, I agree that electricity as an elastic good could potentially lower the demand of electricity. Though I think the largest determinants of demand that will play into this situation are advertising and expectations for the future, since they both play a large role in the consumer's choice of using electricity.
Interesting point, to link that as an externality (because it is, you're right!). I think a lot of people would be very surprised to see how much electricity costs during peak periods (like during the day when it's hottest, etc).
Wow - that's really an increased cost for a new meter, but I think you're right - if someone is into that, the cost will even out over the long run.
Interesting!
Wow, I never knew there was such a thing as a smart meter! The cost for a new meter rather than a regular meter is a big difference, so maybe people should just conserve energy as much as they can all the time. The cost would even out in the long run though. I love my long showers as you know, Ellen, so I am sure my dad would turn off our water heater at the time I take showers.
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