Why GE wants to raise the cost of electricity

If you want to know why General Electric is lobbying for the Waxman-Markey energy tax bill — and the higher electricity prices that would result from it — the company provided yet another reason today.

GE announced that it would develop and manufacture appliances that will supposedly interact with the coming “smart Grid” to reduce energy use. GE-provided examples of this interaction include:

  • A refrigerator will delay its defrost cycle – a cycle that takes more energy than normal operating mode – until the energy load is lower;
  • A dryer will reduce the wattage used by the heating coils;
  • A dishwasher will delay its start until a time of day when energy usage is lower.

Supposedly consumers would be able to override appliance actions, but who knows how easy that would be or whether that capability might be controlled or even phased out over time.

GE has been running a pilot “demand-response” program with Louisville Gas & Electric (LG&E) utilizing GE employees as pilot participants — folks who now seem unduly concerned with saving energy. According to the GE media release,

Dana and Mark Bryan of Louisville, KY stated the appliances also have led to changes in their energy using habits. “It’s helped me get more organized,” says Dana. “I now unload the dishwasher first thing in the morning and then fill it throughout the day. After dinner, I set it to run and the smart programming delays it until after 10 p.m.” Mark reports a 20% reduction of total electrical consumption in the months he has participated in the program. “As part of the pilot, I have an in-home energy monitor. It lets me know the rate I am paying and the instantaneous electrical consumption. Watching that meter has driven behavior changes in my house that have resulted in reduced energy consumption. That explains a portion of the 20% reduction.”

So how much of your time at home do you really want to spend monitoring your family’s electricity usage?

The average monthly electric bill in the U.S. is about $100. If obsessing over the in-home energy monitor saves the Bryans less than $20/month, then I’d suggest that meter-watching is not really a productive use of anyone’s time — unless, of course, you enjoy that sort of thing.

But, if global warming regulation is enacted and electricity prices skyrocket and/or energy is eventually rationed, then meter-watching could, for many, become more of a necessity as opposed to an optional fetish, particularly for those in lower income brackets.

GE will profit, of course, from selling the home monitors and the more-expensive “smart” appliances. But it’s not at all clear that consumers will get any benefits at all since they’ll be paying more for the appliances and more for electricity.

The common sense public policy move would be to increase our electricity supplies and reduce its cost by building needed power plants and transmissions lines and forgoing government mandates on fuels and emissions — so that we don’t have to sweat electricity use.

I’d bet that GE would make more money from making electricity cheaper than it would from making it more expensive.