Smart-Grid and Smart-Meter Technology


A “smart” electrical grid uses technological innovation to improve the system’s function. For example, smart-grid applications, including smart meters, help utilities detect and possibly repair outages. Smart meters identify energy consumption in more detail than conventional meters do (see also this chapter’s section Time-Varying Rates and Demand Response). With in-home monitors or web-based applications, consumers can monitor their energy usage during peak and off-peak hours. It allows them to manage their household energy use and spending better.

This detailed metering is just one of the hundreds of possible applications new technologies offer. There are other types of equipment that can make the grid more efficient, reliable, and secure, including advanced sensors and distribution system automation.

The cost of installing new advanced equipment like smart meters is a concern. New meters are expensive. It is hard to justify replacing existing meters if they are still functional. The use of smart meters may result in operational savings. But those savings may not cover the overall cost of installation. In order to recover the remainder of the costs, utility companies may seek to add surcharges to consumers’ electric bills. Such charges could potentially be greater than the savings a consumer might achieve by participating in a smart-meter program.


Smart grid consumer protections

In this policy: FederalState

Policymakers should ensure that smart-grid technology makes the grid more efficient, reliable, and secure. The grid should also be better connected between regions.

Policies should also prioritize distribution system automation components that have immediate, demonstrable, and direct value for consumers over smart meters.

Regulators should require independent audits to determine whether utilities are prudent in their expenditures and that costs paid by ratepayers are offset against claimed benefits of operational savings.

Smart meter consumer protections

In this policy: FederalState

Policymakers should ensure that smart-meter proposals:

  • retain consumer protections,
  • are cost-effective for consumers,
  • only allow costs that are reasonable and prudent, and
  • do not shift risks to ratepayers, such as through advanced payment.

Residential customers should be able to decline to have a smart meter installed. They should be allowed to opt out of the technology.

Policymakers should assess alternatives to smart meters.

Policymakers should ensure that investment in smart meters and the smart grid are verifiable and transparent and that utilities are held accountable for the costs they want consumers to pay and the benefits they promise to deliver.

Policymakers should ensure that utility companies regularly provide data to regulators and the public on the impact of any implemented smart-meter program.

Policymakers should ensure that vulnerable populations do not suffer adverse consequences if the installation of smart meters results in substantially higher electric bills.

Policymakers should delay installation or upgrade of smart meters until after current meters are scheduled to go out of service or until the verifiable benefits of smart meters outweigh the costs.