Monday, March 29, 2010

Post # 7 - Smart Meters and the National Broadband Plan: a Federal Mandate to the States?

Following up on earlier posts, we should note the importance of the National Broadband Plan, issued by the Federal Communication Commission (FCC) to Congress this past March 16th.

In last year’s stimulus legislation – the American Recovery and Reinvestment Act of 2009 – Congress (among many other things) mandated that the FCC develop a plan for improving broadband Internet access throughout the United States. The goal is to provide 100 million American households with access to 100 Mbit/s (megabits per second) connections (as much as 20 times faster than what is generally available in 2010) by 2020.

This of course goes well beyond the Smart Grid, but the Smart Grid is part of the mix. As the Plan notes, “[r]ealizing the promise of the Smart Grid will require the addition of two-way communications, sensors and software to the electrical system, both in the grid and in the home. Communications are fundamental to all aspects of the Smart Grid, including generation, transmission, distribution and consumption.” National Broadband Plan, p. 249 (emphasis supplied).

Moreover, the Plan directly addresses access to and control of smart meter data. The Plan explicitly calls for Congressional action if the state regulatory agencies that oversee electric distribution fail to act:

“States should require electric utilities to provide consumers access to, and control of, their own digital energy information, including real-time information from smart meters and historical consumption, price and bill data over the Internet. If states fail to develop reasonable policies over the next 18 months, Congress should consider national legislation to cover consumer privacy and the accessibility of energy data.” National Broadband Plan, Recommendation 12.7 (p. 256).

Such legislative action (or its threat) would explicitly “nationalize” this issue. As previously discussed, retail electric distribution historically has been an area that Congress has left to the States. Thus, the Federal Power Act, which establishes the Federal Energy Regulatory Commission as the “federal PUC” for the wholesale electric power industry, explicitly reserves regulation of electric retail distribution to the states. Electric meters, in turn, are the link between electric distribution companies and their retail customers, and there already are smart meter data proposals pending before State legislatures and PUCs (for example, the California Public Utilities Commission proceeding discussed in Post # 5).

But the FCC asserts that smart meter data ownership and access are of national importance. In effect, the National Broadband Plan asks Congress to issue the States with an ultimatum: develop “reasonable” policies or face Federal legislation.

Of course, the Plan’s publication does not ensure Congressional action, and States can be expected to jealously fight for their traditional regulatory authorities. But the National Broadband Plan is another reminder that the Smart Grid regulation, like the Smart Grid itself, does not fall into tidy State-Federal jurisdictional boxes.

Monday, March 22, 2010

Post # 6 - The Smart Meter Wars

Smart meters have many prospective benefits for consumers. Smart meters eventually may be able to communicate with “smart” thermostats, appliances and other devices, giving people a much clearer view of their electricity consumption. Customers may be able to access information via read-outs in their homes or web-based portals, through which they will be able to set temperature preferences for their thermostats or opt in or out of programs that let them use cleaner energy sources (such as solar or wind power). People could set appliances in their homes to scale down power consumption in peak times, when electricity is more expensive.

But these consumer benefits remain potential and long-term. Conversely, once smart meters are installed, utilities receive an immediate benefit in the form of automated meter-reading, which will cut their labor costs and facilitate their planning. Accordingly, some consumer groups deem it unfair that consumers will begin to pay immediately for the new meters through higher rates, when the promised savings to consumers could be years away. In some instances, consumers also complain that, where smart meters have been installed, smart meters are logging far more kilowatt hours than consumers actually are using.

Such consumer concerns already have sparked a backlash in states where smart meter installation is under way, particularly in California and Texas. Largely in response, a number of companies will this week launch the Smart Grid Consumer Coalition, an effort to counter this backlash by promoting the benefits to consumers of modernizing the electricity grid. (For an article on this new group and how it was triggered by events in California and Texas, see here. For more information generally on the consumer backlash against smart meters in California and Texas, see here and here.

Smart meters will be consumers’ principal link to the Smart Grid – and the element of the Smart Grid that will be most visible to consumers. Thus, the outcome of current and future smart meter wars – and not just in California and Texas – will be a major bellwether on the Nation’s ability to create a fully optimal Smart Grid.

Monday, March 15, 2010

Post # 5 - Who Owns Your Data (continued)?

As discussed in prior posts, an important smart grid issue is ownership of consumer data “embedded” in the new generation of smart meters. The traditional electric meters currently attached to our homes or businesses typically are read no more than once a month by the local electric company. Moreover, these meters only show gross electric usage since the last reading. But the new smart meters have the potential to exponentially expand the data points collected, the speed of collection, and the frequency of collection. And that is the whole point. By giving both the electric company and the customer real-time information about the customer’s electric usage, the electric company can better plan energy delivery and the customer can better focus on his or her real-time energy expenditures.

But there is also a downside -- or, perhaps more correctly, a potential (but serious) concern. As discussed in Post # 4, smart meters effectively will be mining data from the electric customer, presenting obvious privacy and data ownership issues.

In that regard, in a recent filing with the California Public Utilities Commission (CPUC), the Center for Democracy and Technology (CDT) and the Electronic Frontier Foundation (EFF) presented their concerns and recommended new rules on the collection and use of smart grid data. (This filing can be found here).

The CDT and EFF point out that new digital meters could collect data 750 to 3,000 times a month. Such detailed and granulated metering, the CDT and EFF fear, will make it possible to put together a picture of household life: when the people who live there get up, when they get home, what appliances they use most and when they go on vacation. Thus, the CDT and the EFF propose the adoption of “Fair Information Practice Principles” that call for informing consumers about what data is collected and how it is used and giving them control over who can see their data -- even if it is stripped of personally identifying information like names and addresses. The two groups would also limit what data can be collected and for what purposes and make utilities accountable for how third parties use customer data.

The CDT/ETF proposal is extremely rigorous, and it will be interesting to see the response by industry groups; state agencies, such as the CPUC, which regulate retail electric sales; and federal agencies like the FERC and the Office of Science and Technology Policy.

The smart grid debate has tended to focus on technical and cost issues. But as the smart grid is actually rolled out, and especially as smart meters appear destined to be the principal point of contact between the smart grid and retail customers, data ownership and control increasingly will be part of the debate.

Friday, March 5, 2010

Post # 4 - Who Owns Your Data?

As mentioned in my prior post, one of the most interesting issues posed by Smart Grid technology is data ownership. While overall Smart Grid development will take some time, and the benefits of a true Smart Grid remain focused in the "land of potential," many utilities are moving full speed ahead with smart meter installation. And smart meters, once operable, will by definition provide utilities with abundant information about their individual customers' energy use -- what appliances they run, when they run them, etc. And that is not a bad thing, because that information will greatly enhance utility efficiency.

But that type of information obviously has great potential commercial benefits -- and value. And not just to the utility, but to all sorts of vendors and advertisers. This, in turn, raises a series of questions, including:
  • Who owns this data? The utility? The customer?
  • Can the utility sell the data to third parties?
  • What data does the utility really need for planning/operational purposes?
  • What data do grid operators and markets who interface with the distribution utility really need for planning/operational purposes?
  • How will this data be kept secure? Will anyone be able to do a Google search for "energy usage" at the home of John Doe at 555 ABC Street, New York, NY?
That debate is going on right now in a forum created by the White House's Office of Science and Technology Policy (see prior post), and the comments to date can be viewed here.
This debate, and not just in the OSTP forum, will be going on for a long time. One thing seems, clear, however. Whether consumers ready or not -- or even fully aware of the fact -- smart meters are important new information portals that can take whoever has access right into a consumers home.

Monday, March 1, 2010

Post # 3 - White House Focus on Smart Grid Consumer Concerns

Early last month, the White House's Office of Science and Technology Policy (OSTP) requested comments on consumer interfaces with the Smart Grid. The inquiry is particularly focused on smart meters, ownership of smart meter data, consumer access to real time price data, and the ability of consumers (or different classes of consumers) to manage peak and overall energy usage using smart technology.

The OSTP is not a rulemaking body. Rather, the OSTP exists to provide the Executive Branch with scientific and technical advice and to help coordinate Executive Branch efforts in the area of science and technology. For that reason, the OSTP inquiry will not result in new rules or regulations. However, the inquiry could well lead to policy initiatives that the Administration may undertake -- through the Department of Energy, the National Institute of Standards and Technology, the Federal Energy Regulatory Commission, etc.

But of perhaps greater importance, the OSTP inquiry really seems to be the first Federal inquiry that is exclusively focused on the consumer end. Of particular interest -- to me, at least -- will be OSTP's conclusions regarding smart meter data access and ownership issues. That is one of the real "sleeper" issues presented by the Smart Grid. Smart meters will gather a lot of interesting (and potentially commercially valuable) household usage information. Who will that data belong to? The local utility? The home owner? The OSTP inquiry could prove to be a very important forum on that.

Note: OSTP will also be looking at smart grid "architectural" questions and data communications standards for consumer appliances (and other devices) that will communicate with the Smart Grid.