Currently, the vast majority of electricity consumers are not provided with a very basic piece of information - a price signal - which would enable them to become smarter energy consumers and to capture attendant financial benefits.

Smart meters would enable consumers to conserve electricity effectively by voluntarily altering the time of their electricity useage. For the most part, consumers today have their electricity consumption recorded by antiquated meters which fail to distinguish between peak and off peak periods, and many electric utilities do not offer rates to all classes of customers that differentiate the time of electricity use.

The failure to utilize broadly new smart metering technologies and time of use pricing plans results in lost opportunities to shift more electricity usage to off peak periods, to lower electricity bills and to make electricity systems far more efficient.

Electric utilities build or contract for generating capacity to meet their peak demand. Accordingly, pricing which encourages industrial, commercial and residential electricity consumers to use less electricity during times of high demand and more electricity during times of lower demand is a highly effective means of flattening the peaks and avoiding the need for the construction of costly new electricity generation and transmission facilities.

It is currently estimated that electricity usage will increase by more than 50 percent over the next 20 years, resulting in the need for the construction of an estimated 1,900 new electricity generating plants. The broad implementation of real time metering can have a substantial effect on this projection.

A new generation of smart meters is now available. They provide real time price information and demonstrate directly to electricity consumers the savings that can be achieved by using electricity to a greater extent during times of lesser demand. By using the information provided by the meter, industrial consumers can schedule energy intensive projects during the evening in summers and during the day in winters. Residential consumers can elect to operate washing machines, dishwashers and other electrical appliances during times when savings will be the greatest.

Even consumers who do not elect to utilize real time pricing will benefit as others employ smart meters. By reducing the peaks in local electricity markets, the overall demand for electricity at the coldest or warmest times will also decrease, and that decreased demand will lead to a reduction in electricity prices in the wholesale market for that region. All consumers will benefit as wholesale electricity market prices decline.

I am pleased to announce that I have secured the inclusion of a provision in the comprehensive energy legislation which will encourage the broader availability of real time pricing meters and the development of real time pricing plans for all classes of customers by electric utilities nationwide. The legislation was approved by the Congress late last month and has been signed into law by the President.