American Electric Power Gets Smart

American Electric Power (NYSE: AEP  ) says it will work with General Electric (NYSE: GE  ) to develop and install "smart meters" to help the company better manage the transmission of electricity -- and give customers more direct control over how much they use, thus saving them money. The plan calls for an initial rollout of 200,000 smart meters to AEP's customers in 2008, with the ultimate goal being to deliver five million by 2015.

The plan, announced last week, is an aggressive one, but AEP has plenty of motivation to meet the goal. Under normal circumstances, the best way to meet growing demand is to simply increase power production. The problem is that it's not cheap or easy to build a power plant or construct a nuclear facility. This delay can sometimes create a classic supply-demand disconnect.

One way of addressing such shortages is rolling blackouts, which are widely unpopular. A far better approach is to increase the price of electricity during periods of peak demand and allow customers to voluntarily choose to control their consumption. For this market-driven approach to work, however, it's essential that consumers have the technology to monitor the price and amount of electricity they are using in real time. This is where the smart meters come into play.

Further, the smart-meter initiative gives AEP a cost-effective, alternative route for dealing with short-run consumption spikes, as opposed to firing up inefficient plants or ramping up capital spending. By taking this step now, the company likely will save both itself and its customers a lot of money and a lot of hassles over the years.

Interested in other clean-tech-related Foolishness?


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 538159, ~/Articles/ArticleHandler.aspx, 10/21/2014 1:32:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement