I'll get to the meat of this topic in a minute, but first, a slight digression. You're probably asking, "what the heck is 'prodigal' consumption?" Prodigal is actually a word that needs to be reintroduced to the lexicon of spend management. According to the Merriam-Webster Dictionary, the word 'prodigal' derives from the "Latin prodigus, from prodigere, to drive away, squander [--] characterized by profuse or wasteful expenditure [or] recklessly spendthrift."
Most of us are prodigal in our consumption of electricity because we pay for it based on a flat rate, despite the fact that the actual periodic cost can vary significantly. Implementation of smart meters will be changing our prodigal consumption very soon.
According to yesterday's WSJ, "Smart meters lie at the heart of efforts to get Americans to use less electricity. Power generation accounts for about 40% of greenhouse-gas emissions, and the U.S.A. 2009 federal study found that smart meters could help cut peak electricity use by 20%." Smart meters "can transmit data on how much power is being used at any given time. That gives utilities the ability to charge more for electricity at peak times and less during lulls. Spreading out electricity consumption more evenly across the day leads to more efficient use of power plants and lower emissions."
The introduction of transparency and real cost pricing models to electricity consumption has "Utilities, economists and even behavioral psychologists ... trying to figure out the best way to convince consumers to cut their power at the right time. They worry that folks will be in for a jolt if they suddenly are exposed to wildly fluctuating prices -- possibly prompting a smart-meter backlash," according to the column. But for businesses, paying real time rates could change things dramatically. If, as the article suggests, the price of electricity can increase by 5X from 2 p.m. to 7 p.m., perhaps we'll see summer business hours change to 6 a.m. to 2 p.m. And that's just the beginning. Everything from restaurant pricing to when we do our laundry will also be thrown into the mix.
Introducing real time cost consciousness to public consumption is not new. Daylight savings time has been fraught with controversy since Benjamin Franklin conceived of the idea in order to save candle wax. And now more than ever, as Ben said, "time is money." To wit, this great old sage who discovered electricity also reminded us that "If time be of all things the most precious, wasting time must be the greatest prodigality" -- the same is true of electricity. I'll stop now.