In the name of conservation, of course.
“Our objective is to have more and more customers participate so we can make a material difference in an event when the state needs us to make a difference,” said Elizabeth Killinger, senior vice president and retail regional president for Texas at NRG, Reliant’s parent company.
The program, which Reliant calls Degrees of Difference, is geared toward customers who use Nest, the Google-owned thermostat that can be controlled remotely over a wireless Internet connection.
Under the voluntary program, when electricity demand gets especially high, Reliant – through Nest – could remotely turn off customers’ air conditioning for around 30 minutes or less in an effort to reduce electricity consumption.
Reliant would then pay customers 80 cents for every kilowatt-hour of electricity they’ve avoided using, based on comparisons to their historic usage.
Officials at Reliant and Nest stress that the program is purely voluntary, and participants don’t lose much control, since they can easily override the adjustment and turn the air back on. But they doubt that will be necessary.
“Most folks aren’t really going to notice when their air conditioner pops off for a short time like this,” said Ben Bixby, general manager at Nest Energy Services.
The plan may seem counterintuitive. Reliant, after all, makes money when customers use electricity. But during periods of peak demand – generally, late afternoon in the summer – companies like Reliant can face extraordinary wholesale costs from power generators, which can charge up to $5,000 per megawatt-hour of power.
That figure is poised to increase to $7,000 in June and $9,000 next year. During normal conditions, wholesale prices from generators are generally below $100 per megawatt-hour.
“If we run into a circumstance where there’s not enough generation, and prices are rising, customer participation will help us reduce our costs,” Killinger said. The upside for Reliant is that the money it saves exceeds the value of the credits it would dole out to customers.
There’s already a program in place like this for large industrial and commercial power users, but residential users create a lot of demand, too. Basically, Reliant is looking to keep the peaks below a certain level, above which it becomes really expensive for them to provide the power needed. It reduces their costs, so they can provide an incentive to their customers to participate, and it may mean less need to build more power plants down the line. It’s a win all around if enough people agree to participate. We have a Nest at home, though we’re not currently using Reliant. I suspect we’d be willing to do this but haven’t discussed it with Tiffany yet. What do you think?