Thermostats, Economy, and State
Fans of electricity policy, sorry if you've felt neglected here of late. Take a look at this interesting post by Lynne Kiesling (with many useful links to continue your edification) on the dilemma market-loving electricity policy mavens feel toward recent moves on California's part to mandate the installation of "programmable communicating themostats." Which are?
a fully-enabled two-way digital communication device. It can receive data, be programmed to respond to data, and send data back about its actions. For example, a PCT can receive a price signal, be programmed with a set point and trigger prices at which to change the set point, and then it can change its settings on your behalf depending on how you've programmed it.
Lynne Kiesling, formerly with the Reason Foundation, sums up the conundrum that these devices present to those who love the idea of a more resposive market in energy, but hate government mandates:
In the current regulatory environment, we are stuck in a chicken-and-egg limbo. If we do not mandate the installation of PCTs to accelarate "fleet turnover" in building thermostats, the distribution utilities have no incentive to install them or offer them to customers. But if there are no PCTs, the demand for innovative retail products and services is less likely to develop. We can't have the retail innovation without the technology, but the parties who currently have the retail relationship have little incentive to engage in retail innovation, and they therefore do not value the technology. From a liberty and coercion perspective it's an imperfect policy in an imperfect world, but it's one that is likely to break the chicken-and-egg cycle and let the camel's nose of retail competition under the tent.
One part of California's thermostat proposal has already gotten some strongly negative press…the part where they say, hey, the government should be able to set your thermostat for you (Jimmy Carter, thou shouldst be living at this hour! Wait, you are? Never Mind.) Anyway, back to electricity policy, from Kiesling:
…..I find one specific piece of language in section 112(c) extremely troubling (and the links above indicate that I am not alone):
Emergency Events. Upon receiving an emergency signal, the PCT shall respond to commands contained in the emergency signal, including changing the setpoint by any number of degrees or to a specific temperature setpoint. The PCT shall not allow customer changes to thermostat settings during emergency events.
…..An emergency means a Stage 2 alert or worse; a Stage 2 alert occurs when supply reserves available to the system in an are only 5 percent larger than the anticipated demand in that hour (called an operating reserve shortfall). If the authors of the document were sensitive to the public's knowledge and interests they would have bothered to define the conditions under which a customer would receive an emergency signal.
Note also, though, that the California ISO annual report for 2006 indicates that even in the record-breaking heat wave in July 2006, there was only one Stage 2 alert (and no Stage 3 alerts). So these "emergency signals" are extremely infrequent, and are more likely to become even more infrequent as the price-responsive demand capabilities and retail choice enabled by the PCT reduce the strains on the system in peak hours.
Read the whole thing, and all the links contained therein, for an electrifying morning.
