Why Your Energy Company Wants You to Use Less

The Secret Behind Electricity Production


You’ve heard about the perks of using less energy – lower utility bills, a smaller carbon footprint, that overall good feeling of being “green,” but what you may not know is that your energy company actually wants you to use less energy.

Why? Because once energy companies spend the money to produce electricity, they can’t take it back.

Energy companies produce electricity based on the amount that their consumers use. This means the more you consume, the more they have to produce, and the more money they have to spend to do so. These companies are always looking for a way to make their supply more efficient and reduce their losses, but it’s hard to calculate accurate usage patterns from their consumers.


Nest, however, has made a brilliant move with their “learning” thermostat. Many may wonder how Nest is making money when each of their thermostats costs about $250, but Nest had a different plan from the beginning – the company has deals with multiple major energy companies and offers up specific information about their customers’ energy habits. The energy company pays Nest around $40 per customer and in return, learns how much electricity that customer is using.

Energy companies can use this information to clearly determine how much electricity they should produce, and in the end, spend only as much as they need to. In return, these energy companies can communicate fluctuating energy rates to Nest so that it can automatically adjust to save you money.

So far, this partnership seems like a win-win.

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