Eye-Popping Electric Bills Spark Smart Meter Investigations in Texas, California

Educated Consumers Can Save Money, But Public Training Is Slow to Reach Out

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You never get a second chance to make a first impression. It’s an old lesson that smart meter companies and utilities are learning the hard way as some of the country’s first smart grid pilots get underway.

Smart meters, unlike traditional meters, analyze home energy use for time-of-day pricing and send the data to customers and utilities to help them better manage their energy use and supply. While that knowledge can help customers save money, the technology is under fire in California and Texas, where lawsuits and scores of complaints are accusing utilities of using the new meters to inflate their customers’ bills.

The meters allow utilities to see if customers are using energy during peak-load times and charge them accordingly under specified plans. That means careful customers can save money by opting to use their high-energy appliances, such as dishwashers and clothes dryers, during off-peak times.

But with consumer education lagging behind smart grid rollouts, thousands of customers haven’t taken advantage of the information and instead have been left thinking that their utility is just price gouging in the name of energy efficiency. Some think it’s a scam cooked up by the utilities; others assume the meters are inaccurate.

The utilities claim that bill increases can be explained by a number of factors, namely increased energy use, energy use during peak-load periods and a colder winter this year. After all, they say, smart meters have been deployed by the millions throughout the world, with few complaints from customers, so clearly the technology is not the problem.

Customers aren’t buying it.

California Complaints

In late 2009, Northern California utility Pacific Gas & Electric found itself in the middle of a lawsuit accusing it of false advertising.

The utility had told its customers that the smart meters it was installing in their homes would help them save money on their electric bills. When some bills went up instead, hundreds of PG&E customers filed formal complaints with the California Public Utilities Commission (CPUC). One Bakersfield resident, Pete Flores, sued the utility, claiming his electricity bill had jumped from about $200 a month to over $500 a month once a smart meter was installed in his house, with no change to his energy use.

The CPUC moved to investigate the claims, and PG&E stopped installing meters in Bakersfield. Now, several months (and more complaints) later, that investigation is officially underway: The CPUC announced this week that it had hired The Structure Group to conduct an independent evaluation.

In California, the CPUC had already authorized Southern California Edison to install approximately 5.3 million new smart meters, San Diego Gas & Electric to install about 1.4 million electric smart meters and 900,000 natural gas meters, and PG&E to install about 5 million electric meters and 4.2 million natural gas meters.

Since these smart meter rollouts began in 2009, the CPUC says it has received about 600 complaints, almost all from PG&E’s service area. In addition to evaluating the smart meters in the San Joaquin Valley, the origin of most of the complaints, the CPUC has asked its independent investigator to evaluate meters throughout PG&E’s territory.

Trouble in Texas

While PG&E submits to an investigation of its meters this week, Dallas-area utility Oncor is preparing to deal with its own smart meter investigation.

The utility has installed about 760,000 meters in its customers’ homes, and complaints to the Texas Public Utilities Commission have increased tenfold in the year since the installations began, all focused on large increases to bills.

The utility claims the increases are due to an unusually cool winter in the region, especially when compared with last year’s unseasonably warm winter. When Oncor ran a side-by-side test of its smart meters and the “dumb” meters it used to use on several homes in its service area, the results showed energy use readings to be the same on both meters, but customers wanted more proof. The commission will now conduct an independent test of Oncor’s meters to determine whether they are functioning properly.

“We’re enthusiastically supporting the testing program so that we can eliminate any seeds of doubt about the accuracy of these meters in consumers’ minds,” said Bob Shapard, Oncor’s chairman and CEO.

"Once we get these concerns behind us, all of us can get focused on the real cause of the high bills and help consumers address that."

Both utilities use Landis + Gyr smart meters, so the court cases and investigations aren’t doing any public relations favors for that company. Stan March, senior vice president of communications for Landis + Gyr, has been reminding the media (and consumers) that the Swiss company has successfully rolled out millions of smart meters around the globe.

Clearly, these two cases are relevant far beyond the borders of Texas and California.

At stake is not just the reputation of any single company or utility, but of the smart grid experiment in general. If customers begin to see smart meters as just a tool utilities use to price-gouge, they’re not at all likely to engage with the meters, or the applications attached to them, in a positive way.

Security Concerns

Unfortunately, rate hikes aren’t the only consumer concern associated with smart meters. Several consumer groups have pointed out that the meters pose security risks, as well.

While companies like Silver Spring and Cisco, which are building much of the networks that smart meters and various smart grid applications will work on, insist security issues are under control, industry analysts and consumer advocates aren’t so sure.

Joshua Wright, a senior security analyst with InGuardians Inc., said in a recent report that smart meters can be hacked without a utility company knowing, and that the communications infrastructure between homes, meters and utilities is often weak. Hackers could break in remotely to shut down someone’s power, raise or lower bills or even steal data from the utility company, according to Wright.

The same issues arose in the early days of the Internet, but while some analysts cite that fact as evidence that more needs to be done on smart grid security, the big tech players in smart grid largely claim the work done years ago to secure the Internet can be easily transferred to the smart grid.

“Internet Protocol [IP, the official communication standard of the smart grid] has been around for many years and there are already many mission-critical networks that run on IP,” says Inbar Lasser-Raab, senior director of network systems at Cisco. “We’ve dealt with those [security] issues many years ago.”

Nonetheless, so long as the media, analysts and consumer groups are talking about the security risks of smart meters, consumers aren’t likely to be comfortable having the meters installed in their homes.

Educating the Public

The negative press surrounding smart meters was part of the impetus for the recent formation of the Smart Grid Consumer Coalition, which is charged with educating consumers about all things smart grid in the hopes of engaging them in modernizing the grid and using energy more efficiently.

“Almost every week right now there’s a consumer group coming out saying they’re concerned about the accuracy of smart meters,” says Richard Walker, CEO of home automation company Control4. “We need to make it clear to consumers what the value of the smart grid is, why they should care, what they can do to reduce their bills. We need to encourage them to participate.”

The results of the Texas investigation are scheduled for release before the summer, while the California investigation is expected to take four months.

In the meantime, CPUC said in a statement about the investigation:

“It is premature to put a moratorium on smart meter installations before we have the results of the independent investigation. There are millions of smart meters installed and operating around the globe with no complaints. In addition, a moratorium would involve costs to consumers for ramping down installation and re-starting at a later date that we cannot determine are warranted at this time.”

The thing is, smart meters, despite the fact that they’re linked into the smart grid — a term that has come to have a futuristic, cutting-edge connotation — are pretty simple pieces of digital technology. They gather and transmit information to an analytic software package that makes that information actionable.

It’s highly unlikely that hundreds of thousands of meters would be inaccurate. However, if customers are given smart meters without any education about how to take control of their energy use, how to do a home energy audit, or to determine which times of the day electricity prices are highest, it makes sense their bills will go up. And in that case, customers are right to blame the utility — not because the smart meters are broken or because the utility is out to get them, but because the utilities have largely failed to explain how smart meters work.


See also:

Will Smart Grid Benefits Be Limited by Dumb Buildings?

Overcoming Obstacles to a Smart Grid Future

Keeping Up With The Joneses to Save Energy