Are Smart Meters An Expensive Sham?


Before we burn billions of taxpayer dollars deploying smart meters, under the auspices of shrinking consumers electric bills, it might be worth considering what effect the new meters will actually have.

The dream of smart meters is that both utilities and consumers with have wide access to specific points of data about how the electricity in their house is being used and at what rate. So, if it’s cheapest to run the washing machine at night, then we’ll know that, and do that to save money. If we don’t want the pool pumped for 3 hours in the summer when it’s most expensive we won’t do that. All of this will be connected via a smart meter system, which can cost up to $500 to install.

Why do they cost that much? Don’t ask the utilities, as this information is a “trade secret” says The Wall Street Journal, who digs into the topic. Those secrets make it difficult to figure out the costs of these programs.

To make the smart meters work, consumers have to actively participate in the system. The Journal  finds that, so far in California, it’s not working:

PG&E Corp., a San Francisco utility, estimated the cost of its meter program at $1.74 billion in July 2006, but recently got permission to spend an additional $467 million, pushing the cost to $2.2 billion for 5.4 million electric meters. It has installed 557,000 meters so far with the capability of letting consumers go online and read energy data. So far, however, only 12,000 consumers have taken advantage of it. PG&E says it hasn’t yet marketed the program and it hasn’t activated the home-area-network capability, which will allow people to take information and put it to work by setting up networks to control appliances, furnaces, air conditioners and other devices.

Do consumers really need smarter systems? As one grumpy citizen says in the Journal story, “There’s no mystery about how you save energy…You turn down the air conditioner and shut off some lights. I don’t need an expensive meter to do that.” If people really want to save money, then they already know how. Developing a system that’s more complicated to operate than setting the time on a VCR clock, isn’t going to help.

Here’s something a reader sent to us recently, reinforcing the idea (complete with their typos):

I have been involved in the electricity market for ~13 years, trading wholesale in the eastern interconnect for the past 6 years.  Over the last 6 months or so I have seen quite a bit about the “Smart Grid” but I’m not sure what is meant when one refers to the smart grid. 

The grid is about as perfectly smart as any mechanism for transporting a good can get.  Unlike any other good, electricity is transported from producer to consumer based on the laws of physics.  I can’t think of something smarter than that.  Where it gets dumb is when humans get involved (especially politicians).  If it remained smart after human involvement trading groups like mine wouldn’t have jobs. 

If a utility like FPL (or any other utility in the nation) really wanted to know about individual consumption or power flows all they have to do is look at their data.  They have hour by hour data on load, hour by hour data on weather, and all of the line shift factors are public. 

From a consumption side, if a consumer really wants to know about power prices all they have to do is log onto the internet and look at the nearest RTO, where power prices are updated every 5 minutes (they could even write a 5 line macro that downloaded the data to their computer or got the direct feed to their mobile device).  It the consumer doesn’t live within the footprint of an RTO, they are within one wheel of an RTO (subtract $7 to the nearest RTO print). 

Lazy access to this data doesn’t make the grid smarter.  It seems to me that if one wanted to make the grid smart and also advance an adjenda, the way to make the grid smart would be an efficient allocation of capital.

…If you look at an individual house, is the $200 for the meter and labour to install + the monthly cost to run it an efficient allocation of capital?  My guess is no.  If you really wanted to allocate the capital efficiently you would (based on the line shift factors) insulate houses, install radiant barriers, shade AC units, paint roofs white…  My guess is that FPL was looking to minimize the impact of the fat tails by shifting load only when they are short and not decrease load in the aggregate.

[Image: Flickr/Cote]

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