From the point of view of my industry’s segment, metering, the Energy Bill 2005 appeared to be ground-breaking: For the first time ever, efficiency measurement, real time tariffs, peak tariffs and specific time period pricing were given a prominent place in a Federal Bill. Issues, for which National and International metering organisations have been fighting for since the early 1990s, finally appeared to be seriously addressed.

Of course, my particular angle did not obstruct the fact that wide ranging legislation was taking place by the only superpower at a crucial time for the energy industry worldwide. To my surprise however, only a few publications on this subject appeared in EnergyPulse, or any other energy magazines to which I subscribe.

My wonder at this low-key reception grew into astonishment, when last month, at the VI Energy Fair in Boston, MA., an expert panel unanimously declared when asked by the audience, that The Bill does not deserve a serious debate. It was, one of them said, compromise legislation with a short time horizon, much too short to affect any momentous policy changes.

In this article I examine this assertion through the metering issues as they appear in The Bill, and assess its possible impact. At the end of this article I will try to project from the private case of metering to the general thrust of The Bill.

Two parts of this bill are relevant to metering. Sections 101 to 104 concern Energy Efficiency in public buildings; and section 1252, which is entitled Smart Metering.

Section 101 imposes on the Houses of Congress and all Federal Buildings in the USA a 20 percent reduction in energy consumption by the year 2015. This change is not just to be ‘reported’ but also to be measured. And not just measured in general – the legislator actually specifies the tool: smart metering.

To be properly measured and not just ‘modelled’, (that is a euphemism that hitherto served all institutions and meant in effect ‘too expensive to measure’) is nothing less than a revolution. Daily and hourly metering systems are to be installed in all buildings before the end of 2012 - the first time, to my knowledge that such a specific undertaking of the meter’s function is openly stated. With it another important ‘first’: an understanding that the cost of additional metering to the consumer is less than the savings in terms of the efficiencies it enables.

It is in effect set to become the largest exercise in history of real-time metering as a tool for energy efficiency management. So far, so good. This is a promising start with a courageous demonstration of a clear vision and bold decision making. The legislator appreciated that ‘doing your best’ or writing long manuals to accompany PR campaigns does not achieve great efficiencies. This Bill announces that trying is not necessarily achieving, and that ‘thinking of switching an appliance off’ does not always do the job.

But more importantly, this is the first time that metering is taken out of the hands of the utilities, its traditional operators. It becomes at once clear that utilities’ job is to sell as much of what they are selling, and the role of the consumer – in this case the Government, is to buy as little of it as possible. Whilst utilities measure the flow of energy to our premises for billing purposes, it is our duty to measure the efficiency of this energy and the two measurements cannot be done together because there is an inherent conflict of interests between them.

However, whilst on the Federal front things are crystal clear, a bit further down the document, in Section 123, which is concerned with general efficiency measures in individual States, already returns to the old ways. It states:

“Each State energy conservation plan with respect to which assistance is made available under this part […of the Energy Bill 2005] shall contain a goal, consisting of an improvement of 25 percent or more in the efficiency of use of energy in the State concerned year 2012 as compared to calendar year 1990, and may contain interim goals.”

In other words, not only are State Governments given the advantage of ‘acquiring’ the progress of the past 15 years, but any future achievements will only be ‘measured’ by a vague 25% increase in efficiency, presumably with the aid of one model or another. No tool is mentioned, and certainly no quantitative methodology.

Similar approaches are demonstrated in a variety of well meaning initiatives, from assistance to low-income groups, to building and housing efficiency measures. The common denominator is the absence of a clear quantitative tool to measure any progress (or otherwise) incurred as a direct outcome of the actions or inactions that result from the Bill. From my perspective, the only tool capable if producing such data is real-time metering, but the word ‘meter’ in any configuration does not appear in this Bill again until 1,000 or so pages later.

There, in section 1252 entitled ‘Smart Metering’ lays the strongest indication that the Bill really isn’t much more than a delaying exercise, or a ploy to reduce public pressure.

This section looks at the three elements that should take home metering to its most potent position, the provision of time-based rate provision:

• Time of use pricing
• Critical peak pricing
• Real time pricing

The first relates to the ability to regulate quantities of energy (and water) used by pricing policies. Summer prices for example, reflect the cost of air-conditioning, as the almost solely electricity based energy, while winter heating reflects the cost of other fuels’ diversity, etc.

The second element reflects the micro time scale in which prices can affect demand. On days or hours when energy is scarcer prices are set in advance to affect use. One example would be the use of air conditioning in apartments during working hours.

The third element is the most impressive in that it enables real time changes to tariffs almost, if you wish, as a retail reflection of the crude commodity on wholesale world markets.

Section 1252 however, starts ominously. The first sentence orders electric utilities to provide each customer, with on request, a time-based rate schedule within 18 months of the enactment of the Bill. After the promising earlier sections of the Bill, we are back to the meter as an instrument in the service of utilities and not a customer orientated tool. Moreover, customers may be entitled to such a device, but have to request it – a procedure that may or may not cost them, and may or may not be feasible within the 18 months allocated to this implementation.

It gets worse. The bill (page 1154) states that utilities may offer any or none of these services to its customers. In other words, ‘we said it, but you do whatever you feel like’ legislation. Rarely has anybody spent good money for the purpose of selling less – which is effectively what the government ‘offers’ utilities to do. Somehow it would not be surprising if utilities will opt (as they are entitled to) not to provide these measures.

The most revealing part of this legislation is however in schedule (F) which puts the whole subject in the appropriate light: it orders (!) each State to… consider these issues within 18 months. It does not order them to try it, it does not order them to pilot it, and it does not order them to consult their customers. No, just to ‘consider’.

In practical terms it allows each State to form an ad-hoc committee that will meet maybe, 10 times during the 18 months commencing in August 2005, where they will discuss this matter and will decide… probably that the time allocated was not sufficient, or something of this nature.

As expected in Federal legislation, this is said in many more words and several pages; it also includes issues such as technical assistance, encouragement, ‘education’, ‘funding demonstration or pilot projects’ etc., but these are all subject to the result of the ‘considerations’ that have to be put before the US Congress by January 2007.

To summarise, the Energy Bill 2005 shows that the legislator or more probably the advisors and consultants used to formulate it, understand the essence of the change that is required to move the energy market forward. The effects of these modifications on the environment and on consumers also seem clear, as are the consequences to the energy industry.

It is perhaps this latter element that watered down what is potentially pioneering and courageous legislation for fear of the mighty oil and gas industry. After all, if all consumers increased their energy efficiency by say 20 percent, wouldn’t it reduce energy sales by the same proportion?

We of course, have no way of knowing what was the process by which the final wording of this text was reached. However, it demonstrates how adding or altering one word radically changes the resulting law. In this case, ordering to consider rather than try, for example, allows everyone to do very little indeed.

So much for the metering part of the Energy Bill 2005, but what can we project from it on the thrust of this Act? It encompass fuels, from oil and gas to renewable and micro-generation through nuclear and fusion. It looks at social issues and economic aspects of our energy dependency. This Bill explores subjects as wide apart as efficiency and equity; productivity and history; and justice and climate change. It appears to be taking an inclusive definition of energy issues that by itself is a brave and long-sighted approach.

However, if the rest of the text is plagued by single words that negate any purposeful progress, than this bill is really not worth any debate. If the fear of change drove the legislator into a watered-down version of their initial drafts it is not going to affect the American or world energy direction.

In a world where small customers consume almost 40% of national energy, and where tariff structures rely on their ignorance in order to compensate for production and distribution inefficiencies, Smart Metering is not a luxury that should be toyed with by lip service. Nor should any other aspect of the Energy Industry.