" wrote:

In other words, the cost of electricity changes during the course
of a day, and smart meters allow utility companies to more
equitably charge individual home owers for the electricity they
use.

"more EQUITABLY"? how is that "more equal",charging different rates
for different times of the day?

Because incremental kWh cost more than those already on line. If the
peaks can be clipped, less capacity is necessary.

Not quite. Consider this:

Household A and Household B both use 1000 Kwh per month. 45% of house
A's usage happens during peak hours (when electricity is more expensive
for the utility to purchase). But 35% of house B's usage happens during
peak hours. But the utility doesn't know this - because both houses
have conventional "dumb" meters that only record total use.

The utility has to come up with a blended (and equal) rate to charge
these customers. Because the meters recorded the same usage, both A and
B will get the same bill at the end of the month. But because house B
shifted some of their usage to lower-cost hours, house A benefits from
this by seeing a slightly lower bill because of the conservation or
life-style efforts performed by household B.

House B can't *fully* realize or *exclusively benefit* from their own
efforts to time-shift their energy usage. Only a smart-meter on both
houses can make that happen. This is how smart meters make electricity
billing more "equitable" between customers.

It's a similar situation in retail commerce. Credit-card use costs
merchants money. So merchants increase prices to cover this cost. When
a customer pays for something in cash, he's unknowingly subsidizing the
merchant's credit-card operating expenses - and credit-card users
realize a small benefit because of this.

Now, all that said, the real question is - what is the possible
magnitude of this imbalance or inequity between house A and house B, and
does it warrant the huge outlay on the part of the utility for new,
expensive meters, network infrastructure and billing systems?

Remember, it's not a question about whether or not house B would benefit
if they used less TOTAL electricity per month compared to house A -
because even using old dumb metering B would see a reduction in their
bill compared to A in that situation.

The real issue is - how large a difference _can_there_be_ in the
peak-use between A and B as expressed as a PERCENTAGE of their total
monthly use, and what does that difference work out to be in terms of
actual dollars and cents.

It turns out that these differences are SMALL when we are talking about
individual residential customers, and do not warrant the huge
infrastructure costs associated with measuring / billing them.

And also consider this: Over time, as more and more customers change
their usage habbits and time-shift their usage, then you have a
situation where the gap narrows and the usage patterns are more equal
between homes, rendering the usefulness of time-of-use metering
practically zero.