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January 29, 2015
Ahmad Faruqui Discusses Smart Meters’ Influence on Energy Behavior for The Washington Post

Brattle principal Ahmad Faruqui has been featured in a recent Washington Post article, “Why 50 million smart meters still haven’t fixed America’s energy habits,” which examines the reasons why smart meters have yet to transform energy consumption habits.

Reaching nearly 43% of homes overall across the U.S., smart meters allow customers to record electricity usage on at least an hourly basis. Behavioral research suggests, however, that this technology alone doesn’t necessarily change what customers do, how they act, and the habits they form. According to the article, smart meters are missing interfaces that relay information from the meter in real time and translate it into monetary value. Consumers also need greater access to smart pricing – pricing that varies based on supply and demand – that could be more informative to consumers when monitoring their energy behavior.

The article suggests that consumers are “rationally inattentive” to how much electricity they’re using at home; that is, consumers are unaware as to how much electricity their appliances and devices use, and at what cost. Unlike at a gas station, where gallons bought and costs incurred are measured in real time, this transparency with electricity costs is lacking. Dr. Faruqui suggests that if consumers’ meters show the amount of electricity being consumed and its cost in real time, they may be inclined to adopt more energy-conserving behaviors.

“There’s no doubt in my mind that having knowledge and information about how much you’re paying is a big factor in deciding how much to use,” Dr. Faruqui notes. “If you get a bill a month later, it doesn’t help.”

The article can be viewed on The Washington Post’s website.