Post # 69 - Maine PUC Allows Consumers to "Opt Out" from Smart Meters

The Maine Public Utilities Commission last week voted to require Central Maine Power to offer an opt-out program for customers who choose not to have a standard smart meter installed as part of CMP’s smart meter program.

Under the Maine PUC decision, Customers in CMP service territory will have two new opt-out options: the availability of the smart meter with its transmitter turned off and the ability to retain the existing (or analog) meter.

The customer who chooses an opt-out option will pay the associated costs of that option: a) smart meter with transmitter off will carry an initial charge of $20.00 and a monthly charge of $10.50; b) existing analog meter option will carry the initial charge of $40.00 and a monthly charge of $12.00. In order to address concerns of low-income customers, those who are eligible for Low Income Heating Assistance (LIHEAP), will be charged only 50% of the cost of their chosen opt-out option. CMP is required to develop and implement a smart meter opt-out communication plan intended to inform customers about the program during the company’s deployment of their smart meter program.

CMP started installing the advanced meters in the fall of 2010 and about a third of the utility's customers now have them, according to a news report from Maine Public Broadcasting Network. But it didn't take long after the installations began for some CMP customers to loudly protest the meter deployment – in a scenario very much like the backlash against Pacific Gas & Electric in California in and led to a similar state commission-mandated opt out program.

CMP had strongly objected to offering any options, saying they would be costly and dilute the effectiveness of the technology for the vast majority of customers who want smart meters. In the end, the company chose not to appeal the decision and deferred to the PUC, saying it was up to regulators to set the policy for smart meters.

Post # 52 - Another Mixed Consumer Report Card for Smart Meters

Last week, the market research and consulting firm Pike Research announced the results of a survey focusing on consumer knowledge and acceptance of utility smart meter initiatives. The results – which Pike says are based on “a nationally representative sample of more than 1,000 U.S. adults” – have both encouraging and discouraging aspects. In particularly, the survey suggests that consumer knowledge of smart meter issues generally increases acceptance.

On the positive side, Pike reports that that among respondents who said they were “extremely familiar” with smart meters, 67% stated that they had an “extremely” or “very” favorable opinion on the devices.

On the negative side, smart meters were the least popular of the four consumer smart grid concepts covered by the survey. Smart meters received a "favorability/interest" rating of only 29% . Other more popular concepts were home energy management (47%), smart appliances (44%), and demand response services (33%).

At the same time, and likely related to the results, 56% of survey respondents described themselves as “not very” or “not at all” familiar with smart meters. Increased consumer access to electricity usage information was identified as an important benefit by 52% of respondents, making this the most frequent benefit cited. Improved reliability of electricity service was second, with 46% of consumers identifying this benefit as important to them. The most popular reason for an unfavorable opinion about smart meters, chosen by 59% of respondents, focused on concerns that the devices would increase electricity bills.

Pike Research's summary of it survey can be found here. These results seem consistent with other consumer surveys discussed in this blog, see here, here and here. Once again, increased consumer education appears the key to smart meter acceptance. And not just education – consumers must see convincing evidence that can realistically expect to benefit financial from smart meters. It's not clear anyone has really made that case in a satisfactory way.

Post # 47 - Smart Grids and Meters May Not Accomplish All that Utility Companies Expect

I have previously blogged about studies indicating that the consumer benefits of smart grid and smart meters may be oversold (for example, Post Nos. 27, 40, 41, and 46). Now, a new study from the British-based technology analyst Ovum casts doubt on the ability of smart grid and smart meters to fully live up to their potential from an industry perspective. While Ovum acknowledges that smart meter and smart grid investments are able to address many issues facing utilities companies, smart meters could increase costs. Ovum also found more investment in newer technologies is needed.

According to Ovum's report on its study, the utility industry faces major -- and possibly conflicting -- challenges. For example, utilities must respond to public concern over CO2 emissions. The cost of needed infrastructure investment is high, while rising fuel costs create pressure to reduce costs. At the same time, many utilities are experiencing an increase in payment defaults due to the economic downturn. Further, the workforce at many utilities is aging rapidly.

Ovum concludes that smart grid and meter investments will be very helpful in dealing with these problems. However, to fulfill the full promise of smart energy, utilities will require further new technologies such as analytics, billing and customer relationship management (CRM) systems. Further, customers may struggle to understand the benefit from smart meters and may be confused by the additional complexity smart meters bring. Ovum also finds that there is a very strong risk that this increase in complexity will cause an increase in customer service costs.

The study highlights two major and related smart grid goals: reducing the environmental impact of existing forms of electricity generation by supporting renewable energy and energy storage; and employing smart meters to influence customer behavior through demand-response programs. But the study cautions that these benefits, while significant, should not be overestimated. While they could make an impact, Ovum concludes that there is a possibility they will not deliver what utilities are expecting.

Post # 42 - Smart Meters in the Nation's Capital

(UPDATED, 10/23/10) The recently issued final report of a smart meter pilot in Washington, D.C. concludes that residential consumers in the nation’s capital consistently respond to variable electricity prices. But, at the same, a consumer watchdog agency in D.C. worries that a impending smart meter roll out is happening without the necessary consumer education.

The project, PowerCentsDC, ran from about mid-July, 2008 through October 2009, and involved approximate 900 D.C. customers of Potomac Electric and Gas Company – or Pepco – the utility service which delivers electricity to 778,000 homes and businesses in the District of Columbia and its Maryland suburbs. Project participants – who lived in all areas of the city, including low-income neighborhoods – received a smart meter, a smart thermostat (if desired and the residence qualified), and new energy price plans that allow savings for customers who reduce consumption during hours when wholesale electricity prices are high.

In fact, PowerCentsDC was the first pilot in the nation to test smart meters with three different pricing plans. Most participants chose a plan in which customers were charged five times the average price during "critical peak pricing" events, which occurred about 60 hours per year, and offered a slightly reduced rate for the remainder of the year. The second plan was an hourly pricing option that offered peak versus off-peak pricing based on the time of the day electricity was used. The third plan offered rebates to customers who voluntarily curbed their electricity use during peak events. For all three plans, consumers could choose to allow their smart meters to automatically adjust a home's electricity use when notified of a peak event. Consumers were able to find out ahead of time when peak hours might occur via an automated phone message, e-mail, or text, and choose to reduce consumption during those hours. Participants also received a chart illustrating their usage habits with each monthly electricity bill.

The pilot program’s final report, issued early last month, finds that most customers with access to smart meters reduced overall electricity use when presented with their habits and a financial incentive to save. Most would also rather curb usage or face high premiums a few times a year during extreme peak events than worry about keeping track of daily peak and off-peak usage hours. So-called peak reductions in summer were greater than those in winter and most of those peak summer events occurred when daily temperatures rose (according to the report, the fact that summer peak reductions were greater than winter “impl[ies] more discretionary load").

When asked to name the methods they used to reduce consumption during peak events, 60 percent of participants said turning off appliances, while 59 percent said they adjusted the air-conditioning. Only 25 percent said they adjusted their heating system (although it should be noted that 54 percent of the participants had a heating system powered by natural gas).

The results also indicate that people may be more willing to curb electricity use, or face paying an extremely hefty surcharge during peak events a few times a year, rather than curbing electricity on a daily basis during specified peak hours.

Perhaps most important for smart grid proponents, the report found that more than 90 percent of all PowerCentsDC participants ended up saving on their Pepco electricity bills, compared to non-smart meter customers. Further, 93 percent of participants said they preferred using a smart meter and a peak rate system than Pepco's current rate plan.

The PowerCentsDC report thus appears to bode will for Pepco’s D.C.-wide installation of smart meters, which is scheduled to begin this week. But at least on local agency is concerned that things may not be ready for prime-time.

On September 27, 2010, D.C.’s Office of the People's Counsel – an independent agency within the D.C. government charged with advocacy on behalf of consumers of natural gas, electric and telephone services in the Nation’s capital – filed a petition with the D.C. Public Service Commission seeking to suspend the smart meter rollout until the Pepco does more to educate consumers about the program.

The petition is noteworthy because along, with Pepco, the D.C. Peoples Counsel was a sponsor of PowerCentsDC and is not a smart grid opponent. Thus, on the one hand, the D.C. Peoples Counsel supports smart meters to the extent that the technology “empowers consumers to reduce their electric consumption, supports energy efficiency, reduces the District of Columbia's overall electric load capacity, and does not impose a financial burden on seniors, those on fixed incomes and lower income electric utility consumers.”

At the same time, the D.C. Peoples Counsel expresses concern about what it terms Pepco’s “lack of early consumer education about how the smart grid will be deployed, the benefits consumer can expect in the short term as well as any alerting them to potential problems that may occur.” The D.C. Peoples Counsel argues that “the ultimate success of the program is inextricably linked to comprehensive customer education on the front end.”

In a response filed filed with the Public Service Commission on October 1, 2010, Pepco argues that the Peoples Counsel's petition is premature. Noting the success of the PowerCentsDC pilot (and what Pepco describes as successful advance notifications to the project participants), the utility notes that its deployment of new meters commencing on October 4th "is, for now, no more than the exchange of old meters for new ones." The utility asserts that, since none of the "smart" capabilities of the meters will be activated at this time, "it would be imprudent to prematurely promote the advanced features that are not yet available." At the same time, Pepco states that customers are being notified in advance with a letter and fact-sheet. Moreover, "Pepco will interface customers at various community events, train [Peoples Counsel] and Commission staff to respond to Smart Meter questions, and provide educational materials through direct mail, the Pepco website, and various media outlets."

In an October 22, 2010 order, the Public Service Commission denied the Peoples Counsel's petition. The D.C. PSC stated that the D.C. City Counsel already had authorized Pepco's implementation once the company had established sufficient funding -- which it had, from a Depart of Energy stimulus grant. Further, the PSC noted that it already had granted a request by the Peoples Counsel to establish a collaborative Advance Metering Infrastructure (AMI) Consumer Education Task Force to develop a comprehensive educational program to educate D.C. consumers on smart meter implementation. While denying the Peoples Counsel's petition, the PSC directed the AMI Consumer Education Task Force to continue its efforts and to address any problems that may develop among stakeholders.

Post # 41 - British Study Suggests That Smart Meters Are No Silver Bullet

Following up on my prior post on the recent smart meter study by the Delft University of Technology in the Netherlands, a new British study likewise suggests that smart meters may not necessarily deliver hoped-for energy consumption reduction.

The study, "Smart Metering: What Potential for Household Engagement," was prepared by Dr. Sarah Darby of the University of Oxford’s Environmental Change Institute. Dr. Darby examined motives and outcomes to date of smart metering programs in California, Italy, Sweden and the Netherlands, among others. She finds that there in fact is little hard evidence about smart meters can actually achieve.Her research shows that smart meters are being rolled out for different reasons in difference regions. In Italy and Sweden, for example, the focus has been on reducing fraud and providing accurate billing. In the Netherlands, Ireland and the UK, and to a lesser extent California, the intention is for smart metering to help users improve their energy efficiency and reduce demand. But in some of these regions, notably the Netherlands and California, efforts have been plagued by customer resistance to the gathering, monitoring and storing of personal data.

Dr. Darby believes that if the roll-out is not handled right, demand reduction will not necessarily flow from an improvement in information. In her judgment, what appears to count more than the smart meter itself is the message energy companies provide about energy use over time and trustworthy, relevant comparisons.

Post # 40: Dutch Report Suggests Smart Meters Are No Silver Bullet

A recently concluded Dutch study suggests that smart meters and similar home energy monitoring devices may not be the silver bullet that guarantees substantial reductions in home energy use. In particular, the report – entitled “Home Energy Monitors: Impact Over the Medium-Term” and prepared by a research team from the Delft University of Technology – concludes that initial savings may not be sustainable over the long term.

The study team examined the behaviors of households where “Home Energy Management Systems" – which the report defines as “intermediary devices that can visualize, monitor and/or manage domestic gas and/or electricity consumption” – had been installed on a trial basis. The goal was to see whether the participants sustained changes in electricity consumption over 15 months. In particular, the team wanted to find out if early reductions in energy consumption were continued over a longer period.

Participation in the study – and the required installation of the “HEMS” devices – was voluntary. The team monitored a total of 304 participants over four months, and then gave them the option of retaining the monitor. Those who kept the monitor were surveyed again 11 months later.

The findings showed that there were initial savings in electricity consumption of an average of 7.8% over the first four months, but these savings were not sustained over the medium to long term. At the same time, the study also found that some people were more receptive to energy saving behavior changes than others and quickly developed new habits, giving them continuing substantial savings.

The authors believe that that more research is needed not just into the design and usability of home monitoring devises, but also on social science issues and contextual factors. The basic conclusion: installing energy monitors alone will not necessarily reduce electricity consumption.

Post # 28 - Smart Grid Speed Bump in Ohio: PUCO Says "Yes" But FirstEnergy Says "We Can't Afford"

In an interesting development, the Public Utilities Commission of Ohio last week approved implementation of a smart grid project by FirstEnergy Corporation. However, because the PUCO declined to act on the company’s request for associated retail rate increases, FirstEnergy’s Ohio initiative is now in limbo.

Coming on the heals of the Maryland Public Service Commission’s rejection of Baltimore Gas and Electric’s request for smart meter cost recovery (see Post # 25), this may be evidence of heightened regulatory sensitivity to shifting smart grid costs from utilities to their customers.

To return to FirstEnergy, on June 30, 2010 the PUCO approved the company’s Smart Grid Modernization Initiative – a three-year pilot program involving 44,000 customers in the service territory of the Cleveland Electric Illuminating Company (a FirstEnergy subsidiary). The program would credit participating customers for power they did not use during times of high demand for two weeks in the summer. The credits would be calculated at electric rates up to seven times higher than standard rates.

But there is a catch. The program also involves the purchase and installation of expensive and sophisticated smart meters, switching equipment, and communications devices. The total projected price of the pilot program is over $70 million, and while FirstEnergy won $36 million in project funding from the U.S. Department of Energy, the company sought to recover the remaining costs through retail rate mechanisms. However, while approving the project itself, the PUCO elected to hold off addressing cost recovery issues until some future time. In response – and almost before the ink was dry on the PUCO’s June 30^th order – FirstEnergy suspended the project (see here, here, and here).

In announcing the suspension, the company argued that the project “has potential benefits for our customers and would bring capital investments and jobs to our region.” Given “the widespread support we received for our federal stimulus application,” FirstEnergy also expressed surprise that the PUCO declined the company’s request for an associated rate increase. FirstEnergy said that “without [PUCO] approval of the matching funds, we are not in a position to move forward.”

But consumer groups had argued that further study was required to ensure that smart grid costs are allocated on the basis of kwh use – because, in the judgment of many consumer advocates, larger customers benefit most from a reliable distribution grid. Consumer groups also asserted that FirstEnergy should not receive lost revenues during this pilot program because FirstEnergy will not likely have any during the pilot program. They also argued that FirstEnergy should be required to credit its operational savings against the costs of the program before FirstEnergy collects any of the costs from customers (see, for example, the comments filed with the PUCO by Ohio’s Consumer Counsel).

As in Maryland after the BGE decision, it’s not clear what happens next – particularly since the PUCO (like the Maryland PSC) apparently remains supportive of the smart grid concept and the use of smart meters. Indeed, the PUCO may not have expected FirstEnergy to suspend its initiative in response to the June 30^th order. It will thus be interesting to see the PUCO’s response to AEP Ohio’s recent request for approval of smart meter-based dynamic pricing, see post # 26.

Certainly, the current PUCO/FirstEnergy stalemate is one more indication that the journey to smart grid nirvana is still very much at the starting point. As utilities move forward with actual smart grid implementation, regulators will ultimately have to address the key question: who pays?

Post # 27 - ACEEE Study: Smart Meters are not the Only (or Maybe Even the Best) Answer

The American Council for an Energy-Efficient Economy, a non-profit organization promoting energy efficiency, this week released a study analyzing the results of residential feedback programs spanning over 30 years. Entitled “Advanced Meter Initiatives and Residential Feedback Programs," the study concludes that smart meters, in and of themselves, cannot be expected to significantly reduce either residential power use or consumer electric bills.

At the same time, ACEEE finds that if U.S. utilities go beyond simple smart meter initiatives to include a wide range of energy-use consumer feedback tools (and depending on the "breath and effectiveness of program design"), consumers could cut their household electricity use from 4 to 12 percent range -- and save from $2 billion to $35 billion over the next 20 years.

The study also delineates the different energy savings strategies of high and low income households, while questioning programs designed simply to shift energy consumption away from peak periods.

The study’s findings are based on a review of 57 different residential sector feedback programs in United States, Canada, Europe, Australia, and Japan between 1974 and 2010. By “making energy resources visible to residential consumers,” ACEEE states that such initiatives are “opening the door” to potential energy savings. The study finds that “[i]f broadly implemented throughout the United States using well-designed programs, residential sector feedback programs could provide the equivalent of 100 billion kilowatt-hours of electricity savings annually by 2030.”

But how to get there? On the one hand, ACEEE believes that smart meter initiatives are likely to play an important and positive role in meeting the data demands of feedback programs – although ACEEE cautions that how feedback is provided to consumers, and whether consumers truly understand the information, will be critical.

At the same time, the study emphasizes “the substantially lower investment costs associated with enhanced billing programs” when compared to smart meter technologies and displays. ACEEE finds that enhanced billing strategies “are currently one of the most effective and affordable means of providing residential consumers with meaningful feedback about their energy consumption patterns.”

ACEEE recognizes, however, that utilities are likely move forward with smart meter initiatives. Thus, ACEEE emphasizes that real-time and "real-time plus" feedback mechanisms could well become an increasingly viable and cost-effective approach to providing households with useful feedback. “These new technologies, and the feedback mechanisms that they empower, can be used to complement the feedback from enhanced billing.”

Beyond the issue of providing feedback to customers, ACEEE finds that programs focused on peak load savings, while generally successful in shifting energy use from peak periods to off-peak periods, are much less successful in generating energy savings throughout the billing cycle. In other words, “programs focused on reducing energy consumption during specific time periods save considerably less energy than programs focus on promoting energy conservation and efficiency at all times.”

ACEEE also concludes that energy saving strategies vary by income level. Higher income households are more likely to purchase new energy-efficient appliances, windows, and devices, while lower income households are more likely to engage in energy stocktaking behaviors or change their energy use habits and routines. Significantly, investments in new equipment and appliances are often undertaken in conjunction with a change of residence or a remodel. ACEEE thus believes that narrowly defined energy efficiency programs aimed at the installation of new, more energy-efficient technologies alone – “the practice of traditional utility programs” -- are likely to realize “only a small fraction of potential behavior-related residential energy savings.”

Given the wide range of both currently available and new potential feedback technologies, ACEEE doesn't believe it can determine “what future feedback initiatives are likely to look like or which devices and approaches are likely to generate the most savings.” Under those circumstances, ACEEE argues that today’s programs should maintain as much flexibility as possible and be designed with change in mind – and that existing approaches should be used to the maximum extent possible.

Post # 22 - Boston Consulting's Smart Meter Study: A Mixed Bag

Last month, the Boston Consulting Group, a global management consulting firm, announced the results of a smart meter survey conducted in December 2009. BCG’s study is mixed bag. On the one hand, the study finds evidence that consumers are prepared to use smart meters – and new technologies that smart meters can enable – to manage energy usage and reduce costs. But BCG also finds a current low consumer awareness of smart metering, a large degree of consumer suspicion of power companies, and the lack of effective communication between power companies and their customers. Moreover, BCG estimates that for utilities to recognize a “winning” return on smart meter investment, from 20 to 30 percent of a utility's customers will have to reduce their overall consumption or peak demand by 15 to 20 percent.

BCG surveyed roughly 1,700 U.S. consumers, of whom (a) 75 percent resided in zip codes with smart meter deployment and (b) 25 percent resided in the same states but in areas without smart meter deployment. BCG notes that this concentration necessarily “skews” the results toward California and Texas. BCG also screened respondents for household income greater than $25,000 and for primary or “at least occasional payers of residential power bills.”

In addition, this was an online survey. Although BCG doesn’t make the point, online surveys may somewhat skew the results to “computerphiles” while leaving out “computerphobes.”

With those potential limitations in mind, the BCG study makes six findings concerning consumer attitudes:

First, there is low overall customer awareness of smart meters and their potential benefits. More than 50 percent of customers have never heard of a smart meter and its benefits, and only 15 percent were “very aware.” Interestingly, awareness levels were not affected by whether there is in-region deployment of smart meters.

Second, consumers in fact generally believe in the potential for smart meters to help them reduce energy consumption. However, BCG finds that they need to be further educated about reliability, privacy, and pricing.

Third, while 40 percent of the respondents "just want power," 60 percent displayed “green attitudes” or “environmental concerns.” Of those “green” respondents, moreover, the vast majority are also cost-conscious, i.e., “interested in the smart meter's cost-conscious conservation potential.”

Fourth, those “cost-conscious greens” have more negative attitudes regarding their power company: fifty percent believe that home power bills are relatively large, while 40 to 45 percent believe that their power company is not interested in reducing consumption “and that the power company is not on their side.”

Fifth, a majority of the respondents were interested in services that can be provided using smart meters as an “enabling technology.” Moreover, they consider utilities to be credible providers of such services.

Sixth, reaching customers with information on smart meters will be difficult, “as few consumers actually read or recall any power-company communications.”

BCG believes that utilities are in a “good starting position” since many consumers are intrigued by the energy-saving capabilities that smart meters would afford. Sixty-two percent of the survey respondents agreed that they would actively log onto an Internet site to check their power consumption on at least a weekly basis. Moreover, 56 percent agreed that they would set their thermostat by time of day based on consumption and pricing information from smart meters.

At the same time, however, BCG estimates that “from 20 to 30 percent of a utility's customers will have to reduce their overall consumption or peak demand by 15 to 20 percent to make smart meters a winning proposition.” Falling short of that threshold, BCG believes, “will likely prevent the utility from delivering the necessary return on investment.”

BCG's press release for the study can be found here. As noted in the press release, a summary of the findings and conclusions can be obtained directly from the company (I obtained a copy, upon which this post is based, but don't seem able to attach it).

Post # 21 - Some Good Smart Meter News From Cape Cod

Over the past few months, I have highlighted problems that have occurred with smart meter rollouts in California, Texas, Australia, and Ontario (see Post ## 6, 8, 11, 13, 15, 16, and 17). But, while those problems are real and significant, there have also been successes.

For example, earlier this Spring the Cape Cod Light Compact – an inter-municipal regional energy services organization representing 21 Massachusetts municipalities (approximately 200,000 residents) – released results from its Residential Smart Home Energy Monitoring Pilot. This program, commenced in February 2009, uses web-based in-home monitoring software (developed by GroundedPower, Inc.) that: (1) provides real-time viewing of actual energy consumption, (2) suggests opportunities for energy saving, (3) actually allows participants to see their neighbors consumption habits, and (4) includes social networking features designed to encourage sharing of energy-saving tips.

The Compact’s independent auditor, the PA Consulting Group, reports that the 100 active participants on Cape Cod and Martha’s Vineyard reduced their daily energy use by 9.3 percent, which is about 2.9 kilowatt hours per day. Approximately three-quarters of the participants reduced energy consumption during the course of the project, and one-third of those participants reduced usage by more than 4 kilowatt hours per days. Interestingly, the ability to share information with other households was perceived as a major benefit by many participants, while a large majority were neither overly concerned with on-line security nor energy “privacy.” Eighty percent logged on to the site weekly, with one quarter doing so daily and nearly half more than three times a week. Nearly all want to continue using the service, and most are willing to pay $8.00 per month for the service once the pilot concludes. To read the Compact’s press release, see here. To read PA Consulting’s entire report, see here.

Of course, the Cape Cod Light Compact is not a large, investor-owned utility with millions of customer in its service territory. And even on the Compact's own level, 100 homes out of approximately 200,000 does not appear to be a particularly big sample. Moreover, there are questions of just how representative pilot participants drawn from Cape Cod and Martha’s Vineyard can be of overall U.S. residential energy consumers. For example, nearly 44% of the participants had graduate degrees, while another 38% had college degrees. Nearly 44% of the participating households had annual incomes in excess of $100,000, while another 17% had incomes in the $75,000-99,999 range.

Nevertheless, the participating households clearly used their access to real-time information to significantly reduce their energy consumption. The Compact's program demonstrates that access to energy information can cause real changes in consumer behavior.

Post # 15 - Smart Meter PUC Updates and Consumer Hearts and Minds

In the continuing saga of the troubled roll-out of Pacific Gas & Electric's smart meter program (see Post Nos. 6, 8, and 13) , the California Public Utilities Commission this week ordered the company to make public PG&E's own confidential reports on the status of its smart meters. At the same time, communities in Northern California next on PG&E's smart meter schedule are asking the CPUC to order a moratorium on further installation to allow further review of issues such as accuracy, security, privacy, and environmental effects.

Meanwhile, the Public Utility Commission of Texas, in response to concerns about smart meter roll outs in that state (see Post No. 6), has just announced that testing of smart meter accuracy -- promised earlier this year -- has begun. This independent testing will focus on digital electric meters being installed by Oncor and Centerpoint Energy. These tests will focus not simply on the accuracy of the meters themselves, but also on the accuracy of information transmitted from a smart meter back through the advanced metering infrastructure that gathers and organizes information to prepare a customer’s electric bill.

These California and Texas actions occur against the continuing backdrop of consumer concerns and confusion about smart metering -- coupled with basic consumer lack of understanding and buy-in to the whole issue of the Smart Grid and smart technologies. In that regard, a study issued this week by international research firm Parks Associates reports that -- even as utilities have deployed 13 million smart meters to U.S. households -- only 11 percent of U.S. consumers are familiar with the term "smart grid". As I've noted before, there exists a real problem of the utilities and their IT vendors getting ahead of utility customers and the public on a whole range of Smart Grid issues.

Post # 8 - The Smart Meter Wars: Consumer Concerns in California As Harbingers of the Future?

As I’ve said before, smart meters are the average consumers’ principal (and most visible) link to the Smart Grid. Creation of a fully operable Smart Grid may well hinge on consumer acceptance of smart meters in their homes. Consumer acceptance, in turn, has at least three elements: (1) information ownership/privacy; (2) consumer confidence that smart meters accurately reflect actual electric usage; and (3) consumer willingness to pay for smart meter installation.

I already have a number of posts up on data ownership/privacy (see Post ## 4 and 5). As for the related “pocketbook” issues of smart meter accuracy and the cost of installation, California is proving to be a major battleground. On the one hand, smart meter installation is probably more advanced in Californiathan in any other state. As of today, the California Public Utilities Commission (CPUC) has authorized the installation of approximately 5.3 million smart meters by Southern California Edison (SoCalEd), approximately 1.4 million electric smart meters and 900,000 natural gas smart meters by San Diego Gas and Electric Company (SDG&E), and approximately 5 million electric smart meters and 4.2 million natural gas smart meters by Pacific Gas and Electric (PG&E), see here.

But this has not come without controversy, particularly with respect to PG&E. To date, the CPUC has received complaints of over-billing – based on allegedly inaccurate smart meter data – from 600 PG&E customers (compared to 10 such complaints from SoCalEd customers and 15 from SDG&E customers), see here.

In response to those consumer complaints (and pressure from California legislators), the CPUC has hired the Structure Group, a utility-consulting firm based in Texas, to conduct an independent evaluation of PG&E’s meters. The contract to Structure is worth about $1.4 million, and will be funded by the CPUC.

At the same time, the cost of smart meter installation, and the question of who pays, may be coming to a head in response to plans of Southern California Gas Company (SoCalGas) to fund a $1 billion smart meter program for its customers. Last month the CPUC’s Division of Ratepayer Advocates (DRA), an independent consumer advocacy division within the agency, has urged the CPUC to reject SoCalGas' application. DRA asserts that the proposed program is not in the best interest of SoCalGas customers, who will allegedly receive only about 85 cents in benefits for every dollar spent on the project. DRA also asserts that the program would raise rates for SoCalGas customers over the next six years. Previously, in February, CPUC Administrative Law Judge Jessica Hecht, who conducted hearings on the company’s application, issued a “proposed decision” recommending that the SoCalGas proposal be rejected. Judge Hecht asserted that the proposal would result in costs exceeding benefits by more than $145 million. SoCalGas disputes the judge's findings, saying that the new project would be slightly in the black at the end of the technology's 30-year life span. Further, in a competing “alternate proposed decision, CPUC Commissioner Dian Grueneich recommended CPUC approval of the project with relatively minor changes (see here and here).

I believe that, in the long run, smart meter installation will roll on in California and many other jurisdictions. But I also think that the smart meter battles in California (and similar battles currently going on in Texas (see Post # 6 and here) are harbingers of rough going for the foreseeable future on the road to Smart Grid “nirvana.” Again, the retail consumer will be the key player, because the consumer is being asked to both foot the bill for smart meter installation and pay bills based on the data that smart meters generate. Retail customers are voters, and smart meter installation will require that the voters believe the benefits will outweigh the costs.

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.