I’ve got a story in today’s Toronto Star about how our local utility, Toronto Hydro, is trying to get regulatory approval to launch a cash-for-conservation program this summer, similar to a program that has been in place in California since 2001. The idea is to give customers — households and small businesses — a 10 per cent rebate off their electricity bill if they can reduce their consumpton by 10 per cent between July 15 and Sept 15 (compared to an average of the same period during the two previous years). The utility estimates that a third of its 500,000 customers will reach the target and it expects it will have to pay out about $5 million in rebates, assuming the Ontario Energy Board approves the program.

This program raises the whole concept of paying for conservation, or “negawatts,” as some people call it. It makes complete sense. Not using electricity, and thus sparing a jurisdiction the need to generate that electricity or import it from somewhere else at considerable cost, should carry a value. So looked at this way, conservation (the negawatts concept) is in direct competition with the power generators, who rake in more profits the more electricity they sell.

This ties in nicely with a Red Herring article published online yesterday, which takes a closer look at the concept of “demand response” and ways new technologies are making it possible to purchase and sell negawatts in order to prevent blackouts.

One U.S. company, called Consumer Powerline, is selling those negawatts to utilities at the same rate they’d pay for electricity during times of peak consumption. At no charge, the company will put meters and monitoring equipment at a customer’s site. Those customers (typically large enterprises) use special software that analyzes energy use and an energy dashboard feature will recommend how to best manage power consumption, such as what appliances or equipment should be turned off. Consumer Powerline pays its customers a portion of the negawatt sales. And like the Toronto Hydro program, customers win twice: Not only do they get a lower utility bill because of the conservation, they get paid on top of that.

I think the only thing missing from the Toronto Hydro program is that it doesn’t provide any software (and real-time feedback) allowing customers to make the most of their conservation efforts. Excuse the pun, but merely telling people to conserve but not giving them a way to monitor and manage consumption is like operating in the dark. Most cleantech companies pursuing this market — EnerNOC, Broadband Energy Networks, GridPoint, Fat Spaniel, Comverge, etc. — try to differentiate themselves using technology/software that maximizes demand-response efforts.

What I’m waiting for is the day my utility can provide me with real-time data of my home energy consumption and an analysis of past usage, along with regular suggestions on how I can improve the energy efficiency of my home. Kind of like how QuickTax software allows me to maximize my tax return based on how much I invest in my RRSP. This could easily be accessed on the Web through a password-protected account. Perhaps the introduction of smart meters, and other smart grid developments over the next few years will enable this.