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PPL Electric Utilities' Smart Meters Prove to be Not So Smart

The Pennsylvania utility touted itself as a pioneer when it installed 1.3 million meters. But those devices proved obsolete in just four years, failing to meet the minimum performance requirements of the state's new regulations.

Turns out PPL’s smart meters aren’t that smart after all, and customers may pay for it.

The Allentown-based utility touted itself as a pioneer when it installed 1.3 million meters from 2002 through 2004. But those devices proved obsolete in just four years, failing to meet the minimum performance requirements of new state regulations.

To comply with the rules, PPL is asking the state Public Utility Commission to allow it to replace the meters again, after about half their useful life, for a cost of $450 million that will tack a monthly surcharge onto every customer’s electric bill through 2030. Under the proposal, the surcharge would start at 58 cents per month in 2015, swelling to a high of $6.69 per month in 2019, then gradually fall again.

The PUC is expected to review and act on the request by the end of the year.

High cost

Costs for household technology such as computers and TVs drop over time even as features and performance increase. That’s not the case with smart meters. A decade ago, PPL wrapped up installation of the meters at a cost of $160 million. This upgrade, approaching half a billion dollars, will cost 180 percent more. PPL spokesman Paul Wirth attributed it to inflation, the high cost of state-of-the-art technology, and central office and communication upgrades required to deploy the new technology.

The current meters rely on the novel technology that uses the electric current to send data through the power line. Communication is far superior to the monthly visit by the meter readers, but cumbersome and primitive. The central office would have to ping, or call the meter to get information.

The new meters will rely on radio frequency technology that send continual signals to receivers serving a neighborhood, which relay the information to substations, which are typically linked to the central office by hardwired communications or dedicated cellular signals.

The new meters will able to report outages, right down the address, allowing PPL to quickly outline the scope of an outage and better pinpoint the spot where the system was damaged or failed. The new meters give customers access to electricity pricing and their own electric use that can help spread adoption of the time-of-use billing, which gives consumers an incentive to shift power use to non-peak hours and saving money.

“Useful life”

In a news release and other information announcing the new meter program, PPL claims the current meters are “reaching the end of their useful life.” But the manufacturer of the meters say they are barely middle aged. Literature from meter maker Landis & Gyr says the meters have a useful life of 20-plus years.

When asked about the manufacturer’s claim, Mr. Wirth said the proposed meter replacement, if approved, won’t be complete for five years and the company wants to get ahead of the replacement. He also said the current meters are failing at an unexpected rate.

Landis & Gyr spokesman Dan Jacobson said PPL meters contain components from other manufacturers, not just Landis & Gyr. If PPL is like many utilities, it probably procured meters from multiple vendors.

“Often the meter is not the issue — it’s the communication module,” Mr. Jacobson said.

He said the type of meter PPL used was for remote meter reading, not a continuous flow of data and consumer engagement expected today. Newer meter technology can send alerts to a customers’ cellphone and deliver real-time information about energy consumption and price.

“Smart metering has come a long way in the last 15 years,” Mr. Jacobson said.

When PPL installed the devices it was one of the first utilities in North America with them. Touting them as cutting-edge, PPL officials said they were pioneers in smart metering. The benefit to the utility was making the meter readers obsolete, ostensibly leading to savings for the company and ratepayers. Hourly usage information was made available to consumers, but had very limited value to customers until PPL’s E-power service launched in 2007. But four years after PPL replaced its last meter, the state Legislature passed Act 129 that included standards for smart meters. The vaunted meters didn’t meet some of those standards of collecting real time energy use and consumer interactivity.

“Even if it weren’t for the other factors, we’d have to do this,” Mr. Wirth said. “The reality is what we have does not allow us to comply.”

Gold Plating

When a utility spends excessively — either replacing equipment that doesn’t need to be replaced or investing in the costliest types of equipment, it raises concerns about a practice known as “gold plating.” As a regulated monopoly, utilities spend on equipment or infrastructure and pass those costs — and an allowed profit margin — on to customers.

In recent years, the utilities’ portion of customer bills — the cost of delivering power — has been rising and pushing bills higher even as the cost of the power itself has fallen dramatically. With power relatively inexpensive and consumption plateauing as a result of efficiency, the recession, and micro-generation such as home heat pumps and solar panels, utilities have to spend money to make money from ratepayers.

The regulatory process creates a perverse incentive to spend as much as they can, but is also designed to protect ratepayers from gold plating, said Acting State Consumer Advocate Tanya J. McCloskey.

The advocate’s office of attorneys, accountants and experts will review PPL plans, looking out for excessive spending, the capability of the existing meters, and the sort of technology PPL wants to deploy.

“We will investigate PPL’s claims, bring in expert witnesses, and evaluate their costs and strategy,” she said. “We will compare what they want to do with what other utilities have done nationally and make sure their requests are reasonable.”

Privacy concerns

The smart meters face another obstacle, a small but vocal group of citizens opposed to their use or deployment. The arguments against range from privacy concerns — the utility knowing when you are home, what room you are in and possibly what appliances are being used — to more specious health concerns about radio frequencies emitted by the meters, although they are what one would experience from wireless phones or Wi-Fi hot spots.

Before Edward Snowden, the National Security Agency contractor who leaked U.S. spy activity, showed how customer information gathered by businesses could be obtained by the government, it would have been easy to disregard such views as fringe. Beyond the government, there is also the possibility of hacking the meter’s radio signal.

“These meters are an invasion of privacy and it’s been shown they can be hacked,” said Lisa Nancollas, of Lewistown, Pennsylvania, chairwoman of Stop Smart Meters in Pa., a citizen’s group.

She said smart meters have been implicated in house fires and that their accuracy over time is in question.

PPL dismisses those claims.

Mr. Wirth notes that meter manufacturers comply with American National Standards Institute health and safety requirements. He said the meters are accurate. PPL conducts its own testing to confirm that meters meet those standards.

Many government agencies, regulators and health organizations have studied radio frequency meters and none have found any health risk, Mr. Wirth said.

Either way, Ms. Nancollas said utilities and ratepayer are put on a cycle of paying to upgrade technology.

“Meters will never be smart enough and never have enough capabilities,” she said. “We will always be paying for upgrades for technology we don’t need and that pry further into our personal lives.”

©2014 The Times-Tribune (Scranton, Pa.)