Post # 55 -- Smart Meter Privacy Remains a Major Concern

IDC Energy Insights, a Massachusetts-based research and consulting firm, has released a new study – Utility CIOs: Living in a Smart Grid World – presenting results from a survey of "North American utility executive IT leaders." While generally focussed on the role of IT specialists in their companies' smart grid initiatives, the study (summarized here) shows that privacy fears remain in the hearts of many utility customers.

Indeed, according to the survey, privacy has emerged as the number one concern related to data security and management, with data governance as an emerging concern. As utilities implement new initiatives such as smart metering, data volumes are expected to increase significantly. While management and integration of this data are themselves priorities, IDC's respondents overwhelmingly reported data privacy as the key element of IT strategic plans for security. In particular, the study found that customers have a great deal of concern about how their data is being used and distributed.

Beyond the issue of privacy, IDC finds that most utilities have an strategic plan for information technology that takes smart grid into account. However, and surprisingly, one third of the utilities surveyed stated that their IT departments are not involved in developing business cases for new initiatives such as renewable generation, energy efficiency, smarter distribution grids, and smart metering. In fact, in the case of 13% of utilities, IT does not become involved until the project is well under way.

On wonder whether this lack of upfront engagement by utilities with their IT professionals -- which in a curious way mirrors many utilities' lack of upfront engagement with their customers on smart grid issues -- is the cause of at least some of the difficulties utilities have encountered when trying to convince their customers (and regulators) of the benefits of smart meters and other smart technologies.

Post # 54: A California Smart Meter "Opt-Out"?

In one of the latest examples of consumer-driven push back against smart meters in California (see, for example, here and here), California Assembly member Jared Huffman (D-Marin County) last week introduced a legislation (Bill AB 37) that would enable consumer to decline the smart meter installation.

According to Mr. Huffman’s statement on the proposed legislation, Bill AB 37 directs the California Public Utilities Commission to provide an “opt-out” alternative for customers who do not wish to have a smart meter installed – and to require that utilities make this option available using “wired technology that provides equivalent smart grid reliability and efficiency.”

The opt-out “alternative,” however, is not defined in the bill. Rather, AB 37 directs that by January I, 2012, the CPUC must identify alternative options for customers that decline smart meter installation and “ensure that these options are made available to customers.”

The bill also directs that utilities disclose the timing, magnitude, frequency and duration of radio frequency (RF) emissions. Finally, AB 37 directs that the CPUC temporarily suspend smart meter deployment until this opt-out alternative is in place.

In his statement, Mr. Huffman says his bill “is about giving consumers reasonable choices. Whether or not you believe RF exposures from Smartmeters are harmful, it’s only fair that consumers who are concerned about health effects be given complete technical information and the choice of another technology for devices that are installed at their homes.”

The prospects for this bill are not certain – Assembly Member Huffman represents one of localities where resistance to smart meters has been most vocal, and it is unclear how much overall support AB 37 will have in the California legislature.

Moreover, by tying the “opt-out” provision to some undefined “equivalent” alternative, this bill demonstrates the potential conflict between consumer “empowerment” and efforts to achieve energy efficiency. As one commentator has noted, “[t]he bill may offer some sense of control for consumers over how their utility information is gathered, but it could also change the effectiveness of an integrated smart grid if chunks of consumers choose not to participate.”

Of course, and this appears true of most smart meter debates in the United States, consumers generally become part of the serious debate only against the backdrop of ongoing utility smart meter installation. When the history of smart grid development is written, I expect that the record will demonstrate that utilities should have engaged their customers on these issues prior to smart meter roll outs.

Post # 53 - New Perspective Down Under

I have previously discussed the on-again/off-again smart meter roll outs in Australia, where there has been some strong consumer push-back, particularly in the state of Victoria (see here and here). A new report now indicates that the Australian utility industry is concerned that the opposition to smart meters is standing in the way of smart grid development down under -- and now recognizes that consumer empowerment will be a key factor.

This is borne out by the 2010 Australian Smart Grid Study recently released by the Asia-Pacific division of Logica, the UK-based international IT and management consultancy firm. Logica surveyed thirteen of Australia's major electricity generation, transmission and distribution companies, each of whom provided one or more interviewees. The study provides a view of industry strategies and the status of individual programs, and is well worth a read by anyone interested in Australian smart grid development.

But I want to focus here on a key report finding: according to the survey, the "Smart Grid will not happen without consumer involvement." The report goes on:

There has been an increased awareness [among the surveyed companies] of the importance of the customer in the development of the Smart Grid. This represents a significant change from last year, when Smart Grid pilots and thinking tended to be more technologically oriented and focused on the grid.

Logica concludes that much of this new attitude is directly attributable to the consumer revolt in Victoria and the negative press it created nationwide. As a result, according to the survey, companies are now trying to involve customers in the process, and distributors in particular "are closely aligning consumers with their Smart Grid planning." Logica concludes that "a significant portion of the Smart Grid benefits will ultimately be driven by consumers."

Of course, the smart grid jury remains out -- in Australia and everywhere else. But the Logica report is one more example that smart grid proponents, and industry groups in particular, are waking up to the key role consumers will play in any successful smart grid implementation.

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 # 51 - Radiation and Smart Meters: One More Battlefield

Update (12/2/10): The California Public Utilities Commission today, by a 4-1 vote, declined to go forward with the requested health inquiry discussed below, determining that the matter was outside the agency's area of technical expertise. The CPUC decided that it instead should defer on this issue to the Federal Communications Commission. (Technically, the CPUC voted to adopt the decision of an agency administrative law judge dismissing the request for an inquiry. The decision adopted by the CPUC can be read here.)

Although we don't usually think of them in such terms, smart meters are radio transmitters, sending radiofrequency microwave radiation (RF) signals from both electric and gas meters. As the public has become more aware of smart meter roll outs, there have been increasing public concerns over whether such RF signals constitute a public health risk. While industry groups such as the Utilities Telecom Council point to studies indicating no significant health risks, smart meter opponents are not so sure. And concerns over RF emissions are becoming a new battleground in the smart meter wars.

For example, in Maine, opponents of Central Maine Power Company’s smart meter installation have asked the Maine Public Utilities Commission, which approved the $192 million program, to stop it and investigate potential health effects. And similar concerns are being raised in California.

California, of course, long has been ground zero in the smart meter wars, largely due to the consumer revolts that have dogged Pacific Electric & Gas’ smart meter installation. Concerns over radiation entered the mix this year, and the EMF Safety Network, a group concerned about electromagnetic radiation, filed a request with the California Public Utilities Commission asking for a health study of PG&E’s smart meters. PG&E, in response, asked one of the CPUC's administrative law judges to dismiss that request, and the judge tentatively agreed.

However, in written comments filed earlier this month, the CPUC’s Division of Rate Payer Advocates – a unit within the CPUC charged with seeking the lowest possible rate for service consistent with reliable and safe service levels – recommended that the CPUC investigate those health questions. In its comments, the DRA argues that the CPUC has a responsibility to ensure that PG&E's wireless meters do not endanger public health. The DRA does not itself take a position on the health issue one way or the other. However, the DRA argues that the fear of potential health effects has already helped undermine public confidence in the new meters and must be addressed: "Unless the public's concerns can be put to rest, there is a very great risk that PG&E's SmartMeter deployment will turn out to be a $2.2 billion mistake that ratepayers can ill afford."

I certainly do not have the expertise to weigh in on the health issue, although it's unclear to me that smart meters present any concerns not already present with our ubiquitous cell phones, iPads, blackberries, wireless notebooks, etc. But there is a broader issue here. Fears over smart meter radiation are just one more example of apparent industry failure to anticipate consumer concerns. A major obstacle to smart grid advancement – indeed, perhaps the most important obstacle – remains the absence of real consumer input at the front end. Consumer concerns would be best addressed, and consumer buy-in better achieved, if issues such as smart meter radiation were fully debated before smart meters roll outs actually begin.

Post No. 50 - Xcel's SmartGridCity: Still Not Over

As I suggested in my most recent post, Xcel's victory at the Colorado Public Utilities Commission is my no means final.

While a PUC administrative law judge ruled that Xcel should be allowed to recoup approximately $45 million in installation costs from retail ratepayer -- about three times the company's original estimate -- administrative appeals to the full commission have been filed Colorado's Office of Consumer Counsel and two other parties. I do not yet have the filings, but their appeals are summarized here.

So the saga of what has been a smart grid poster child -- on way or the other -- continues.

Post # 49 - Xcel's SmartGridCity Wins Another Round

In another step forward for Xcel Energy's SmartGridCity project in Boulder Colorado, an administrative law judge for the Colorado Public Utilities Commission has ruled that Xcel may recoup nearly $45 million in costs from retail ratepayers -- an amount three time's higher than the company's original estimate. Next stop -- an appeal to the full PUC.

Xcel first announced that the company had chosen Boulder as the location to build its experimental smart grid in 2008. At the time, company officials estimated that the cost to the utility would be $15.3 million. However, the costs incurred by Xcel ballooned over time, causing the company to ask the PUC for permission to increase its rates to pay for the project. Last December, the PUC granted conditionally Xcel's request, but told the company that it must retroactively file for a Certificate of Public Convenience and Necessity, which gives the PUC more authority to regulate the project. The PUC ruled that if the certificate was not granted, Xcel would be forced to refund customers any money collected to pay for the smart grid.

Xcel filed its application last March, leading to contentious litigation before the PUC as to whether ratepayer benefits justified ratepayers bearing the costs. Last August, Xcel, the Governor's Energy Office and staffers at Public Utilities Commission proposed an agreement, recommending that the certificate be granted and that Xcel's cost recovery for SmartGridCity be capped at $44.5 million. It was this settlement agreement that the PUC judge has approved.

But the game is not over -- opponents can appeal the judge's decision to the full PUC. In particular, Colorado's Office of Consumer Counsel -- a state agency charged with representing the interests of residential, small business and agricultural consumers before the PUC -- has strongly opposed the settlement and is expected to appeal.