A smart meter is an electronic meter for electricity that has a capability for remote communication.
Traditional ‘accumulation’ meters generally record total consumption over three month period. This means customers are charged the same amount for the electricity they use no matter what time of day it is used.
Smart meters make it easier for customers to shift some of their consumption away from periods of very high demand. This means direct financial savings to customers because some of the electricity consumption occurs in a lower-priced period.
Time-of-use-pricing is a type of customer tariff that varies the price of electricity for different periods of the day. It can include ‘dynamic peak pricing’ – this involves very high prices for limited periods of extreme peak demand (usually related to very hot or very cold weather) and communicating these periods to customers (usually a day ahead).
Customers can benefit from time-of-use pricing if they are able to shift some of their consumption away for the higher price peak periods.
Not all customers can benefit equally and some customers may be worse off under a time-of-use tariff. Peak demand for electricity usually occurs during extremely hot or cold weather this potentially will have impacts on equity between customers – those who can and cannot afford extra cooling or heating.
Customers who are not able or not willing to shift their use of electricity away from peak periods will likely face higher bills.
Customers will have to change their consumption behaviour by shifting some of their consumption away from periods of very high demand to avoid higher price peak periods.