Published: October 28, 2009
I'm going to tell you how to save some money.
It's an easy fix. You probably won't notice anything other
than the savings.
It has to do with your icemaker.
If your house is anything like mine, there are certain sounds
you've learned to ignore. My dishwasher, for example, makes a
loud noise when it finishes the cycle and turns off. I've
learned to live with it. Likewise, there's a floorboard upstairs
that moans every time someone steps on it. I don't even hear it
anymore, but it can wake a guest out of a sound sleep.
Another noise my mind has trained itself to process but
ignore is the icemaker. You know the sound I mean: The muffled
crash of a new batch of ice cubes falling from the icemaker into
the ice bin.
Turns out that's one expensive noise.
Icemakers draw a tremendous amount of power. And they
typically use power during the heat of the day. When you fill a
pitcher or a cooler or even a glass up with ice, a sensor in
your ice bin activates the ice maker to make enough ice to
replace what you've just used. That tends to happen during the
day when you want to make something cooler, typically because it
is warm outside. That's when power is most expensive.
So if you want to save money, look inside your ice bin and
raise the sensor arm so it thinks the ice bin is full. If you
run low on ice, put the sensor down when you go to bed (Power is
cheaper at night). You'll save money on power, you'll still have
plenty of ice, and the sound, which you're already used to,
won't keep you awake.
That's a low-tech solution.
The high-tech solution was announced yesterday.
President Barack Obama traveled to a progressively "green"
power company in Florida -- FPL, which my colleague Tom
just wrote about. There the president said he would allocate
$3.4 billion from the $787 billion stimulus program to upgrade
the nation's increasingly beleaguered power grid.
The grid is the largest machine on earth. Some describe it as
more of an ecosystem. This nationwide system of power
distribution is a complicated web of power generating nodes,
transformers, power lines and other equipment that must all work
in concert to deliver power.
The grid has one serious, fundamental problem: It only goes
one way. Once the power leaves the utility on the wires, there's
no way to track it. Power coming into a home is metered so it
can be paid for, but the power company has no earthly idea if
power is actually flowing to houses and businesses in any given
area unless a customer calls to report an outage. And there are
plenty of other things a two-way grid could track. As of now,
though, the system only works one-way.
Mr. Obama hopes to change that. (To be fair, I should mention
that his plan is not entirely altruistic: He'd also like to
create jobs, cut power usage during peak time and, hopefully,
use less carbon-emitting coal.) Part of his solution is "smart
These devices -- which use existing technology and are
already in use in some areas -- can communicate with the power
company and, eventually, with appliances that use power. Some
smart meters are already integrated with building thermostats,
which allow the power company to increase the temperature in
your home on hot days during peak hours to conserve power.
In the future, your icemaker will automatically make ice only
at night. Your washer and dryer will go into energy efficient
mode during peak hours. And your plug-in vehicle won't draw any
juice from the grid until nighttime. Other applications will
save Americans billions on their power bills, and cut the amount
of pricey power we use in peak times.
Mr. Obama's $3.4
Billion 'Smart Grid' Investment
Empower Consumers to Save
Energy and Cut Utility Bills
Efficient Electricity Distribution
Integrating Different 'Smart'
Components of the Grid
The Obama administration says these
meters (and other parts of the grid that his $3.4 billion
grant is funding) will create thousands of jobs. Plugging
them in will save billions of dollars. Most people won't
even notice the effects, but the overall plan -- which also
included upgraded transformers and special sensors -- will
make for a more efficient, less expensive power grid.
One hundred utility companies received grants from
the feds, most of which they had to match or exceed with
their own dollars. So the bottom line is that this
federal largesse, part of the $787 billion stimulus package,
will mean a total of $8.1 billion in grid-related spending.
While the good people at the Department of Energy tried to
quantify every element of the story, one thing they didn't
tabulate was the total number of these "smart meters" that
utilities will be buying.
Well, I added it up. And I was shocked.
The answer is an astonishing
16.6 million. That's a lot of business for smart-meter makers.
100 utilities are only a tiny fraction of the nation's 3,000
power providers, all of whom will be installing smart meters
for their customers.
These three companies are major smart-meter manufacturers:
Comverge (Nasdaq: COMV)
This New Jersey-based maker of smart meters and
software to manage them has had a spectacular
run so far this year, with a +144% gain since
Jan. 1. The past five days have shown a slight
loss, indicating the market is less than
enthused about its chances to profit from the
impending smart-meter orders from the nation's
utilities. The company has yet to show a profit,
though its revenue trend is promising, with its 2008
top-line +128% higher than 2006.
Past Three Years
EnerNOC (Nasdaq: ENOC)
This $700 million company doesn't have any earnings, though
it has promised a profit for 2010. Like Comverge, it has
rising revenue but is still racking up losses, bleeding
through $18 million in the first half of the year on about
$60 million in revenue. The NOC in its name stands for
Network Operations Center, where it monitors power streams
for its customers. While the rest of the
energy community was tuned to the White House's announcement
of smart-grid funding, EnerNoc was trumpeting a new contract
with the state of Connecticut.
Itron (Nasdaq: ITRI)
Itron isn't a startup or a small-cap, it's a $2.3
billion company with a strong history of increased
earnings. Its shares are trading at their typical
valuation, so any investor who wades into these
shares is betting on the smart-meter orders juicing
Washington-based Itron's bottom line.
It's not a bad bet: The company itself issued a news
release after the Energy Department announced the
grants, congratulating the feds for their vision and
noting that some of the largest grid recipients --
such as San Diego Gas & Electric and CenterPoint
Energy (NYSE: CNP), were among its clients.
Of these three companies, Itron is the clear leader.
Itron's long history of rising profits shows it is attentive to
industry, and it's poised to snag a large percentage of the
16.8 million new smart meters the Energy Department's latest
grants will help fund, as well as millions more from other
power producers. At $200 each, the CenterPoint
contract alone could mean $440 million in revenue and, at a
10% margin, would add $44 million to the bottom line -- three
times what the company earned last quarter.
In the future, smart meters and other intelligent appliances
will help us conserve power.
In the meantime, you can save a few bucks turning off your
icemaker during the day and flipping on the dishwasher on
your way to bed. As for your portfolio,
Itron appears to
offer the best opportunity for growth-oriented investors
-- Andy Obermeuller
Chief Investment Strategist