On Tuesday October 27th, 2009, the the Obama administration announced 100 federal grants to support smart grid projects around the country. The stimulus funds would inject $3.4 billion into modernizing the grid, and when combined with the investments from utilities companies would mark an $8 billion overhaul of the nation’s electrical grid.

Smart meter technology uses wireless networking to shuttle information directly back and forth between utilities and customers. Consumers will have direct access to their energy readouts, while eliminating the need for costly manual readings, and making it easier for utility companies to address gaps in service.

Proponents of smart grid technology (a smattering of politicians, utility companies, and some environmentalists) are quick to list the myriad of benefits that could gained by a switch to smart meter technology.

-Consumers can access a real time read out of electricity use and function, which can help them schedule their energy usage around more expensive peak time prices, which would in turn reduce demand and the need to build additional power plants.
-Smart meters would reduce the need for power utility vehicles, which spew large amounts of CO2 into the air each year.
-Smart meters will help utility companies better identify problems on the grid, and reduce the risk of widespread blackouts like the one that wracked the East Coast in 2003.
-Consumers can sync their smart meter with “smart appliances,” which pick up signals directly from the utility companies and regulate machines according to peak hour pricing.
-Smart meters make it easier to route solar, wind, and other renewable energy resources to consumers.
-Widespread instillation would lead to a wave of innovation and job creation so to efficiently monitor and regulate smart grid technology.

But where there is a will you can rest assured there is a watchdog—or several. Recently the California utility watchdog group TURN asked regulators to halt the instillation of smart meters in California. As a result the Public Utilities Commission has agreed to hire an independent investigator.

On their website, TURN argues that the costs of smart meter technology would outshine the benefits. They argue that utility companies will naturally shift the costs of installation and monitoring costs to the consumers through a series of “energy surcharges.” Examples in Maryland and Texas may demonstrate the validity of this argument.

Furthermore, TURN believes that smart meters would result in issues of equity for consumers. In order to take full advantage of the benefits of smart meters, consumers would have to make additional investments in communication devices, computers, high speed wireless, special thermostats, chips, and retrofits to existing appliances. Lower income consumers would find themselves at a disadvantage, forced to pay the rising prices of peak hour demand, without the option of avoiding them through costly retrofitting.

TURN is not alone in their criticisms. Since smart grids began generating talk in 2008, numerous watchdog groups and smart grid opponents have voiced concern over the widespread optimism fueling smart meter overhaul.

A symposium held at GE Global Research
in Niskayuna, NY last July discussed some of the apparent problems faced by smart meters. One of the most pressing concerns is that allowing utility companies to increase peak hour pricing would put people who cannot turn off electricity during peak hours, such as hospitals, at a tremendous disadvantage.

Additional concerns include the escalating threat of cyberterrorism that a wireless gird would present, and encroachments on privacy, as minute-to-minute monitoring would provide a potentially uncomfortable glimpse into the private lives of consumers.

An article in Business Week argues that by controlling the meters remotely, utility companies will have the freedom to change prices on the fly, such as raising rates on hot summer days. By creating real-time markets, they force consumers to model their energy habits around peak hour demands, or be met with volatile prices.

As a result, some states have suggested switching to flexible pricing models, and allowing consumers to opt out if inclined. Utility companies, such as Pepco, say they willing to work with flexible and voluntary pricing models.

What do you think? Are smart meters an essential step in reducing our electricity habits? Or is it the next “Hydrogen Economy” — an instrument of green hype, riddled with problems?

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