Industry Market Trends

Smart Meters: Efficient? Economical? Healthy?

Nov 18, 2011

Smart meters are one of those things, like rechargeable batteries, that would seem to be pretty much all to the good. Keep closer track of just how much electricity is being used, offer discounts for using electricity during off-peak hours -- smart appliances can now be set for that sort of thing, running a dryer at four in the morning, say, instead of five in the afternoon. Lots more extra electricity in the system at four in the morning.

And it'll save the electric companies money on sending guys around to read meters. Plus smart meters are a great way for electricity sellers to make a lot of money. A whole lot.

But of course there are two sides to everything, and yes, there are those who don't think smart meters are such a good idea. They say there are health hazards, economic drawbacks and other ills, such as -- this comes from the paranoid conspiracy wing, mind you -- the fact that electric companies will be able to control your electricity usage and impose quotas on people.

So What's The Real Deal?

Smart meters are fairly pricey, costing anywhere from $250 to $500, much more than the old analog meters with their reassuring whizzing dials. Plus there's the installation costs, and it all adds up to quite an expense. Whether that expense is recouped via all the wonderful promised savings depends on who you talk to -- industry advocates will trot out people who claim it's saving them hundreds of dollars, and there are plenty of examples of outraged customers whose electricity bills skyrocketed after the smart meters were installed.

As the Associated Press reported recently, "Some consumers, especially in California where Pacific Gas and Electric began installing smart meters in 2007, claimed they saw their bills skyrocket with the advent of the devices. Others contend they haven't seen much of a difference in their bills."

So there you have it, folks, welcome to the House of Krupp: Guns and ammo for both sides.

Did we mention that the only sure savings is the energy company saving on the cost of sending out meter readers? We're sure they'll pass those cost savings on to you. Hold your breath.

Major Point #1: Economics. Yours and Your Electric Company's.

The United Kingdom is planning one of the most advanced smart meter rollouts in the world. In March the left-wing British paper The Guardian reported that the roll-out "will require 53 million smart meters to be installed in 30 million homes and businesses, starting in 2014 and finishing in 2019."

The Guardian notes that households "are likely" to save about $35 a year on energy bills by 2020. Yep -- and friends, this is what smart meter advocates are claiming based on "estimates" with every incentive to take as rosy and appealing a view as possible. Thirty-five bucks a year. Break out the champagne. Bear in mind that each of these units costs at least $250, before installation.

Jessica Driscoll, senior advocate at Which?, a British consumer advocacy group, told The Guardian "It's too difficult to say that people will save a certain amount of money. The savings depend on people making changes to the way they use energy, and that is very hard to do. Smart meters are just one way of helping people make those changes."

Indeed, one major contention of smart meter advocates, which seem to be mainly energy companies or funded by energy companies, is that they'll help people save energy by showing energy usage in real time, which evidently is supposed to encourage people to turn off unneeded appliances.

So the way the argument runs, currently British people are unaware of the fact that appliances run on electricity which costs them money, and they need to be shown in real time that the fact that they're leaving lights on in a room is using electricity which they're paying for. Because they're unaware of that now.

Have we mentioned that the one group who all are agreed will definitely see beaucoup savings from smart meters are the energy companies pushing them?

Major Point #2: Efficient Energy Usage

Smart meter advocates say the devices will help distribute energy usage more effectively. They'll be able to let the energy company know faster when power goes out in a certain area. Evidently these are the energy companies who don't answer their customers' calls.

Consumers are also concerned about how utilities will use the highly valuable information they glean about customers' energy use habits. That sort of data is pure gold to the right people, and let's face it, valuable data tends to find its way to those willing to pay for it, no matter what promises are made or what requests are made or what agreements are signed. That's just life in 2011. You want privacy, go join Amish community.

There is merit to some of the ideas smart meter advocates propose. Maybe it really doesn't matter when you run the dishwasher. Maybe the electricity company will cut you a deal if you run it at two in the morning, when it's more convenient for them, instead of at seven in the evening when they have less free energy to play around with.

Okay, fair enough. You don't care when your dishes get washed as long as it's before tomorrow morning, the electricity company cares enough to sell you cheaper electricity for doing it during off-peak hours, win-win. Great.

But with the capability to run appliances at times preset with the energy company comes the short step of the energy company deciding when, in fact, you do run the appliance.

Not to get all tinfoil hat here, but let's think about this for a minute. Smart meters give the electricity company the power to turn the energy on and off in your home. That capability is there. Oh they'll all swear six ways to Sunday that they would never, never, ever do that, of course, but... the capability is there.

Let's say some local politician, charismatic governor, faceless state assembly swimming in energy lobby cash, decides there's an "energy crisis," define it as you please. Much political pressure will be brought to bear on energy companies to "assist customers" with "sensible plans" for "some temporary planned conservation measures" required by law to fall within "agreed-upon parameters" designed to "reduce carbon emissions" and "achieve a fair and equitable distribution of energy for all" which will be achieved by "cutting off your power for X hours a day" depending on whether you're a "premium ratepayer" or on the "economy plan" or related to "a politician" and charging "an arm and a freaking leg" for using electricity during peak hours for "the good of the planet."

Oh we know, that'll never happen, of course. Never. Americans wouldn't stand for it. Just like they wouldn't stand for intrusive body searches at the airport or $4 a gallon gas.

Think about it: Is saving a nickel every time you run the dishwasher worth agreeing to let the energy company have even the potential capability of controlling your energy usage? And can you really stomach some jumped-up bureaucrat functionary like a certain Jonathan Schrag, Connecticut's new deputy commissioner for energy, telling you that "If you want to dry a pair of blue jeans at 5 o'clock on a summer night, you should pay more for it. It shouldn't cost the same as doing it at four in the morning," instead of allowing you to decide for yourself when you'll dry your clothes?

Major Point #3: Health Issues

Some folks say the constant radio wave emissions of smart meters gives them headaches. These concerns are being taken seriously. This March, GigaOm reported that Pacific Gas & Electric is willing to allow customers to have their meters read manually -- for an extra charge. You know, what they do now for free.

The specific complaint against PG&E in Northern California -- yes, we were shocked too -- is, according to GigaOm, that "the 900-megahertz, wireless mesh radios built by Silver Spring Networks and installed in meters made by Landis+Gyr and General Electric can cause human health risks." They don't have a lot of hard science or studies backing up their claim that the meters are, in fact, health hazards, but it's devilishly hard to prove a negative -- how do you tell a guy standing pointing at his head saying "I have constant headaches ever since that durn smart meter was installed" that he's wrong?

PG&E wanted to charge an up-front fee of $270 and monthly fees of $14 for regular customers who choose the opt-out option. Have we mentioned that energy vendors stand to make a whole lot of money off smart meters, and that even the minimally creative ones can make a whole lot more?

So if you're an energy vendor we can see, what with greatly reduced maintenance costs, a new treasure trove of highly marketable customer data, the ability to control customers' energy usage and hundreds of dollars of fees for customers worried about their health, that yes, the meters are very smart indeed.