Smart meters need smart consumers

Education as well as technology is key to realizing benefits

This cross-post is by CAP’s Richard W. Caperton.

Twenty years from now your relationship with your electric utility likely will be fundamentally different from today. Currently you use electricity whenever you want, pay a flat rate for all of the energy you use, and the only real service you expect from your utility is to keep the lights on. Consumers in 2030, however, will have houses that are optimized to use energy when it’s most efficient, pay rates more closely related to the power’s cost, and expect their utility to be much more of a service provider.

At the heart of this change is information: information about the energy we use, how we use it, and the real value of that power. Data will flow in a two-way conversation between homeowners using electricity””and maybe even producing it, too””and the energy companies managing the electricity grid.

The smart meter is a key to managing all these information flows, and new research shows that smart meters are technically up to the challenges of the future. Consumers now have to learn how to benefit from this new technology.

Several high-profile news stories document consumer opposition to smart meters. This opposition usually stems from consumers being unconvinced that the meters will provide benefits that outweigh their costs. But it is now clear that the meters themselves are already a marked improvement over the traditional electromechanical meters on most consumers’ houses.

For instance, Structure Consulting Group found that PG&E’s smart meters were incredibly accurate in its report for the California Public Utility Commission, or CPUC. One-hundred percent of the smart meters (611 out of 611) met CPUC’s rigorous accuracy standards, but just 141 out of 147 traditional meters did so.

The potential of these new gadgets goes well beyond the accuracy of their readings, however. PG&E’s meters will enable the utility to tell consumers how much electricity they’re using and help consumers manage their usage. In short, they are teaching devices that can help customers be better-educated consumers.

They can also offer new and enhanced services. Baltimore Gas and Electric in Maryland (a subsidiary of Constellation Energy) recently received approval from the Maryland Public Service Commission or PSC to replace all of their traditional meters with smart meters. BGE will implement a new pricing structure where all customers automatically earn rebates by curtailing energy consumption during high demand periods when the grid is stressed and wholesale power prices are high. Pilot studies from across the country show that knowledgeable consumers can significantly reduce their electric bills under such dynamic pricing structures.

Smart meters will help utilities manage their own operations, too. Virginia’s Dominion Power, for example, concludes that smart meters will help them run their distribution grid more efficiently. This will ultimately result in reducing the amount of electricity they have to generate by roughly 3 percent. These savings will reduce customers’ bills enough to fully offset the cost of the meters over 15 years, and they will cut pollution and strain on already maxed-out energy grids.

These three examples demonstrate that smart meters can work. But utilities need to do more than provide state-of-the-art metering technology for consumers to fully realize the benefits of smart meters. They need to educate their consumers on how smart meters will affect them.

Research just published in the Proceedings of the National Academy of Sciences shows that consumers have only minimal knowledge of how to save energy, and this knowledge is critical to them getting the full benefit of the information smart meters provide.

Of course, PG&E, BGE, and Dominion are all sophisticated companies. They know they need to carefully manage their relationships with customers, so their smart meter plans include education efforts. BGE, for instance, plans to spend $60 million educating consumers about their new smart meters.

The problem is that no one knows what education efforts will be effective. PG&E, as an early entrant into this market, had to struggle with this element of their smart meter rollout””and this almost certainly led to some of the rollout’s challenges. Maryland’s PSC voiced sizeable skepticism about whether or not BGE’s education efforts would be effective. And Dominion continues to formulate a customer communication plan as it demonstrates the smart grid technology in Virginia.

In each case it is clear that the technology is powerful but to put these tools to the most effective use more work needs to be done to effectively engage consumers, communities, and advocates as well as build the back-end systems for utilities.

The federal government can play a part in this education effort. So far it has invested billions of dollars in the smart grid as part of the stimulus bill. Most of this money will be spent on researching technological challenges that still exist or on investing in smart grid infrastructure, such as smart meters. It’s becoming clear, however, that consumer education will be just as important as technological soundness in the nationwide implementation of smart meters.

Instead of focusing entirely on technical solutions the government could invest greater resources into learning more about how to teach consumers about smart meters. The Department of Energy should request that either the National Renewable Energy Laboratory or the Lawrence Berkeley National Laboratory“”both of which have significant expertise in electricity rates and utility operations“”develop a framework to guide utilities’ education efforts in their smart meter rollouts. The framework would be based on research into a growing body of knowledge about smart meter education, including pilot studies, experiences with large-scale rollouts, and broader lessons from social marketing campaigns (such as national efforts to combat littering or forest fires). There are also important international examples, such as the smart meter program run by Enel, Italy’s largest utility, which has connected 32 million customers to the smart grid.

The framework would identify best practices and successful techniques, and it could include a sample education plan. In many ways the framework would be closely related to the Federal Energy Regulatory Commission’s recently released National Action Plan on Demand Response. Armed with this information a utility like BGE would be able to start with a template of proven educational methods and adapt it for their own unique local considerations instead of starting from scratch.

The Department of Energy and many others in the energy and engineering professions tend to think of energy as a technical challenge. But this isn’t always the case. If anything, smart meters’ ultimate success depends just as much on how utilities and their customers interact as metering technology. DOE should dedicate resources to education research that will help the nation take full advantage of the smart grid’s future promise.

Richard W. Caperton is a Policy Analyst with the Energy Opportunity team at American Progress. For more on the Center’s analysis in this area please visit the Energy and Environment page of our website.

23 Responses to Smart meters need smart consumers

  1. Daniela says:

    Consumers generally don’t pay enough attention to where their energy comes from and how they use it. Technological innovations can’t help much if people don’t know about them. How much more expensive are these meters, and do typical meters ever need to be replaced? It might not be the sexist side of environmentalism, but new relationships with energy are coming one way or the other.

  2. BR says:

    I have to say that more awareness is needed on the privacy and security problems with smart meters, especially among those who promote them. I personally do security consulting work and was hired to do an analysis of a commercial smart meter that is now probably in thousands if not millions of locations. The security of the system was woefully inadequate, the systems to provide privacy to users nonexistent. And yet utilities go ahead with them anyway.

    I know the energy conservation arguments for smart meters, but I think the privacy issues are huge and have not been resolved at all. Utilities and smart meter manufacturers need to put a lot more work into fixing those issues before forging ahead with this.

  3. mike roddy says:

    BR, I agree with you about PIR systems, but keycard activated microprocessors don’t have that problem.

    We all support chunks, or piecemeal solutions, but until we stand up to the oil and coal companies it will be too little, too late.

  4. paulm says:

    A massive satellite that harvests the power in solar wind could meet the energy needs of all humanity and then some.

  5. BR says:

    Mike – ultimately the data that is collected is stored at the utility. Unless the utility encrypts the data in such a way that only the individual utility customer has the cryptographic key, it’s too easy to abuse. I went to PG&E’s page on this and there were many circumstances in which they said they’d release customer data collected from a smart meter – not just upon issuance of a court order. I think the data should be encrypted under a key that is stored in a smartcard held by the customer (that is also doubly protected by a password). The only way for a nosy police department or credit agency or whomever to get at that data would be to get a search warrant to go into the person’s home and get that smartcard.

  6. Chris Winter says:


    Don’t you think that scheme is a little grandiose? Not to mention that, as one of the comments points out, it’s got some powers-of-ten goofs.

    A few months ago, I piled on some disbelief in a solar power satellite scheme to which PG&E had apparently signed on. Compared to this, that was like putting a barbecue pit in your back yard.

  7. Greg F says:

    I was looking forward to my new Smart Meter being installed soon, but the county has halted the installations here in Santa Cruz County. Pretty sad that progress on our Energy Future is halted by unfounded fears.

  8. Eric says:

    You can start with your own “smart meter” by getting a Ted 5000, Brultech ECM-1240, Efergy unit, currentcost, etc – there are many devices out there to measure your whole-house electricity use for $200 or less. Several of them can then get hooked up to google powermeter, etc, for visualization. It’s not at the level of detail & integration that we’ll eventually get to, but it is extremely informative, and, for an energy geek like myself, quite fun. :) (I built my own, for added fun!)

  9. Dan Kauffman says:

    So Big Brother will be controling my thermostat from a centralized location and determine when and if I can run my AC?
    When you pry my hairdrier from my cold dead fingers

  10. In the meantime, utilties that don’t yet have SmartMeters but that offer tiered pricing could quickly roll out a low-tech educational campaign: Mail their customers SmartStickers that they can put on their appliances that say things like “Use me before 11 am to save $” or “Wait until 7 pm to run me.” Much cheaper and quicker to roll out…

  11. Steve says:

    What’s that old business adage?

    Anything that can be measured can be managed?

    I think I’ve seen savings of 10%-15% quoted for pilot programs, rather than the 3% savings mentioned in the article.

    A really effective smart meter would monitor use on all major appliances in the house, as well as give real time pricing.

    And once you have a plug-in hybrid in the garage, this device will be a necessity. Let’s see… should I pay 25cents/kwh to charge my car at noon, or 2 cents/kwh to charge it over night?

    And managing peak load is a huge issue. The reason that your utility company may want to build the next power plant is because they need to have the capacity to handle the highest possible load on their system.

    Probably 95% of the time, the grid is running well below capacity.

  12. Chris Winter says:

    Here’s a better description of those “Dyson-Harrop Satellites.”

  13. Steve says:

    And maybe once we see how much we spend drying each load of clothes, (even at today’s “pollute-for-free” market prices) that clothesline may not seem like such a crazy, old-fashioned idea.

  14. The Wonderer says:

    It’s not that I don’t trust the meters, it’s that I don’t trust the utilities. $5 says that rather than being revenue neutral, the utilities will turn this into a profit center for themselves. Anybody remember the advent of ATMs?

  15. bingler smith says:

    Energy orbs now adorn dorms at Oberlin College. When it glows red, students are reminded that energy consumption is very high and they need to conserve. When the orb is green, consumption is at an acceptable level. Students at the college don’t even have to pay electric bills but have demonstrated that they can cut consumption by 56 percent when competing with each other.
    Natura Cleanse

  16. K. Nockels says:

    everyone in our county is getting their smart meters, we are lucky in that our power company is a co-op. Our county in miles is hugh compared to the population. We vote and decide on the type of power generation we want such as hydro which is our main supply although we are now buying from wind and solar as well. we already have our new meter and I can check on every aspect of power use in our home. Going to a tankless hot water heater was really a savings, along with the clothesline of course. If you want to save money and the planet you have to know 1) how much power you use everyday and 2) where you can save on useage in the home the smart meter tells you right online any time you want. You also need to know how that power is being generated. We need to stop taking it for granted.

  17. Jim Groom says:

    Some very interesting comments indeed. We live in the foothills of the Sierra in Grass Valley, Ca. We get warm summers (90+) and snow for several months during winter. PG&E had a sub-contractor put in smart meters in our area back in July. So far we have not noticed much of a change. Our local newspaper held an online pol on locals reaction to the little devices. Here are the results by percentage. The total number of votes was 690.

    Higher: 46.81%

    Same: 33.48%

    Less: 19.71%

    Your guess is as good as mine as to what these figures tell us. I imagine that many of the votes were based upon ‘feelings’ rather than analysis of the data. BTW, in our case we voted about the same. If the letters to the editor indicate anything, it is that a large segment of the public is just against smart meters based upon political beliefs or feelings that someone is trying to tell them what to do. Time will tell who is correct.

  18. GFW says:

    “Energy orbs [..] When it glows red […] energy consumption is very high […] When the orb is green, consumption is at an acceptable level”

    How much energy does it take to run the orb? And why am I having a Logan’s Run flashback? :-)

  19. hapa says:

    3% isn’t a reduction in pollution, it’s a slowing of the growth curve. if CAP isn’t facing facts seriously, and the democrats are behind them, and the republicans are behind them, hope fails me.

  20. Mike#22 says:

    Not sure what the worry over security is about. Many old meters have had sender/transmitters installed so the utility can read them from the street. I have never heard of a privacy case involving how much juice is flowing…

  21. Doug M. says:

    FYI, I noticed in one of the disclosure sheets that came with my latest monthly PG&E bill that they’ve submitted a petition to change all their customers’ default billing plans to time-of-use, rather than the current tiered pricing. Looks like it would take effect in 2014, if approved. Sounds like the next step after all the smart meters are installed.

    I’m sure many will object, but it will probably be a good thing for the climate, and maybe even the customers themselves — if, as the article here suggests, consumers are properly educated about how to deal with it.

    It also occurs to me that that this change coming in 2014 seems like something that should factor into any calculations of how quickly energy-saving installations (e.g. solar PV) will pay back. Might give a further boost for solar.

  22. Omega Centauri says:

    I think one of PG&Es big PR blunders was timing, they installed a bunch just before a heatwave. Customers blamed the meters, not the weather! Of course when people expect that corporations are out to rip them off, misunderstandings are almost inevitable.

    Privacy: Do you expect someone will commit suicide, because someone released a U-tube video claiming they wasted power? Is there a possibility someone will publish a city map highlighting the energy hogs? But, one thing is clear, indoor marijuana plots require substantial power, looking for houses with very high electric bills has been used to locate potential violators.

    Currently for the average homeowner, the smart meter means no change at all. A little easier to read than the old style meters, but I suspect only energy geeks such as myself read their own meters.

    Isn’t the nearterm savings to the utility, the ability to remote read the meters? Cutting down on the labour cost of collecting data could be a substantial saver. Ultimately, time of use, especially if coupled to short term grid balancing needs could be very important. It is claimed that fuel savings from variable sources like wind are less than expected because of the need to maintain spinning reserves. Obviously load management is going to grow in importance as time goes by.