Consumers Wary of Smart Meters

Last month, Maryland's Public Service Commission rejected an $835 million smart-meter installation plan put forward by the Baltimore Gas and Electric Company.

by / July 23, 2010
Installing a Smart Meter PG&E

In California, some 6 million of the new high-tech meters are already in use. Photo courtesy of Pacific Gas and Electric. Story reprinted courtesy of

When President Obama signed his economic stimulus bill into law last year, he singled out for praise funding for installing advanced electric meters. It was part of $3.5 billion set aside for so-called "smart grid" improvements. "This investment will place smart meters in homes to make our energy bills lower, make outages less likely and make it easier to use clean energy," Obama said.

There's universal agreement that new high-tech meters to replace dials that spin in circles can help do all of the things Obama said they would. Smart meters can be used to send consumers price signals so as to encourage them to use less energy when it is most expensive. They also can let utilities reap new efficiencies by automating meter reading and quickly identifying power outages. But implementation of the idea has been controversial. Increasingly, consumers are calling on state regulators to move cautiously on smart meters, citing complaints in some states that the meters are raising electric bills rather than lowering them.

The latest evidence of a backlash comes from Maryland. Last month, the state's public service commission rejected an $835 million smart-meter installation plan put forward by the Baltimore Gas and Electric Company, or BGE. The commission's order professed enthusiasm for the long-run potential of smart meters, but said BGE was asking ratepayers "to take significant financial and technological risks and adapt to categorical changes in rate design, all in exchange for savings that are largely indirect, highly contingent and a long way off."

Consumer groups were relieved by the decision. "We don't reject the technology," says Tiffany Lundquist, a spokeswoman for AARP Maryland, which testified against the plan. Apart from $136 million of federal stimulus money, BGE proposed to have ratepayers fund the installations using a "smart grid charge" on customers' bills. "The entire cost shouldn't be borne by the consumer," Lundquist says "There has to be a balance between the customer and the utility itself."

BGE submitted a new plan immediately after the rejection, keeping a looming July 30 deadline in mind as a last-chance grab for the stimulus money. This time, BGE pushed back the date when customers would begin paying for the meters and dropped a mandatory time-based pricing requirement that would have allowed it to charge different rates at different times. The Maryland Public Service Commission doesn't plan to hold hearings on the revised proposal until August, a timeline that may put the federal money at risk. "A $136 million 'discount' on an $835 million ratepayer investment cannot dictate the outcome here," the commission said of the stimulus funds.

Understanding the Technology

States across the country, including Maryland, have been experimenting with smart meters on a pilot basis for the past several years. But only recently have regulators begun allowing utilities to roll them out in force. Ohio and Oklahoma recently approved smart meters, to go along with large concentrations of them in California, Colorado and Texas. In California alone, some 6 million homes are equipped with smart meters.

Along with the new technology have come consumer complaints. Individual and class-action lawsuits have been filed against utilities in California and Texas, claiming that the meters aren't reliable and have only produced mounting utility bills for customers. In California, the state Public Utilities Commission launched an investigation into the Pacific Gas & Electric Company after consumers in Bakersfield said that their utility bills shot up around the same time PG&E installed smart meters there.

PG&E, which supplies much of Northern California with natural gas and electricity, has denied any problems with the meters. But Mark Toney, executive director of The

Utility Reform Network, a consumer advocacy group in San Francisco, says his office receives 20 to 30 complaints about smart meters each week, most of them citing utility bills "mysteriously going up."

In April, a state Senate hearing drove PG&E to release records showing that that there were indeed some problems associated with smart meters -- but that getting accurate readings wasn't one of them. There were some problems with faulty installations, failure to preserve customer usage information and trouble sending usage data back to the utility. But the company found only eight meters measuring energy use incorrectly.

In fact, there's some evidence to suggest that smart meters actually are more accurate than older meters, says Katherine Hamilton, the president of GridWise Alliance, a coalition of technology companies and utilities. "Analog meters degrade and slow down over time," she says. "Immediately, when you put in a digital meter, the reading will become more accurate."

That may explain why some consumers are seeing higher bills, Hamilton says. She suggests that the real problem with smart meters may be that consumers have false expectations that they will save money just from having new meters installed. "A meter in the wall doesn't save money itself," she says. "It isn't smart unless the consumer is actively engaged in it."

New Meters are Not Enough

That message is reinforced by a recent study from the American Council for an Energy-Efficient Economy, which says that meter initiatives alone aren't enough to save energy. It concluded that households could cut their electricity consumption by 12 percent and save at least $35 billion over the next 20 years if utilities use them to give consumers more information about how they're consuming power in ways that will motivate them to cut back.

One of the reasons AARP Maryland didn't support BGE's first proposal was because the meters didn't come with an in-home display unit that would give up-to-date information on energy consumption. Instead, consumers would have to buy that extra piece of equipment. The only alternative would lie in checking the information online, which couldn't be posted until the next day.

Hamilton says the key to success it to make consumers a part of the process. GridWise Alliance is attempting to do that with focus groups designed to educate consumers about the technology and listen to their feedback. "It's difficult to do, because it's not a straightforward project," she says. "If you don't know how your consumers will respond, it's kind of a risk for the utility companies."

Contact Joey Peters at