Tech drives market changes

'Larger customers want to know years down the road how much they will be paying for electricity.'

Armed with new technology and competitive rates, the electric-utility business is on the verge of making over the way it distributes energy and bills its customers. Some parts of the country are further along than others, but Rhode Island is one of the leaders, being one of only 25 states with “smart grid” legislation, which facilitates alternative power-supply agreements. More

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Tech drives market changes

'Larger customers want to know years down the road how much they will be paying for electricity.'

Posted 8/27/12

Armed with new technology and competitive rates, the electric-utility business is on the verge of making over the way it distributes energy and bills its customers. Some parts of the country are further along than others, but Rhode Island is one of the leaders, being one of only 25 states with “smart grid” legislation, which facilitates alternative power-supply agreements.

The Ocean State deregulated power in 1996 (following the National Energy Policy Act of 1992) and established retail choice for large industrial customers beginning July 1, 1997, with small industrial customers following suit as of Jan. 1, 1998.

At first the deregulation enabled power suppliers to compete purely on price. Later, suppliers began to tempt industry with long-term contracts using fixed prices. Now, smart electricity meters and real-time pricing offer the latest in managing electricity use and cost.

National Grid, for example, charges the same rate during peak hours as in the middle of the night. Not so for “nonregulated power producers,” advisers that buy electricity elsewhere yet sell it to commercial buyers at an agreed-to, and often cheaper, price.

Enabling this market is the so-called “smart grid,” a distribution network that uses two-way communications, advanced sensors and controls, advanced meters, and computers that monitor electricity supply and demand, and can reduce customers’ energy use (and cost), while at the same time improving the efficiency and reliability of the electricity grid.

At the power-purchasing end of the system, “smart” meters record consumption of energy in intervals of an hour or less and communicate that information to the utility for monitoring and billing purposes. This two-way communication allows for pricing that varies depending on the time of day, week or month that a customer draws on the power. It also helps National Grid operate its electricity network more efficiently and reliably for the benefit of all its customers.

But while some energy purchasers work directly with National Grid on controlling its costs, third-party brokers are helping companies make the best deals with alternative energy suppliers while taking a more informed approach to when they use (and are charged for) electricity. Two such companies operating in Rhode Island are Freedom Energy Logistics LLC of Manchester, N.H., and TransCanada Power of Westboro, Mass. Some of FEL’s clients include Roger Williams Hospital of Providence and Our Lady of Fatima of North Providence, both part of CharterCare Health Partners, and The Westerly Hospital. The company serves 60 clients in the New England area.

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