Experts: Smart meters face image problem

Electricity utilities aren't doing a good job of explaining the benefits of the smart grid, some experts say

Despite the U.S. government spending billions of dollars to encourage electric utilities to roll out the Internet-powered smart grid, the nation is at a critical stage for adoption of the next-generation electrical system and accompanying smart meters, some experts said Tuesday.

The U.S. Congress designated US $4.5 billion for smart grid deployment in the American Recovery and Reinvestment Act, the huge economic stimulus package passed in early 2009. But there appears to be a growing consumer backlash about smart meters, and in June, the Maryland Public Service Commission rejected a plan by Baltimore Gas and Electric to install smart meters, saying the BGE plan put too much of the risk on the backs of customers.

The Maryland PSC's decision put at risk about $200 million in smart grid grants from the U.S. Department of Energy, although the state agency invited BGE to submit a new plan, which it did Monday.

Many consumers aren't sure how much the smart grid and smart meters will benefit them, said John Howat, senior policy analyst at the National Consumer Law Center. The smart grid promises to allow dynamic pricing of electricity, but consumers see potential downsides to paying more for electricity at peak times, and for paying for smart meters and related equipment up front, he said during a New America Foundation forum on the smart grid.

In April, a utility in California used a smart meter to remotely shut off the electricity of a customer behind on monthly payments, Howat said. The family lit candles and a fire started, killing four children.

Consumers have a "what's-in-it-for-me" mentality, and electric utilities across the country haven't done a good job of explaining the benefits of the smart grid and smart meters, added Robert Leiberman, principal with the Regulatory Assistance Project, a nonprofit focusing on the economic and environmental sustainability of the power and natural gas sectors.

Advocates of the smart grid, including U.S. President Barack Obama, say it will allow customers to better understand how much energy they use, allow them to lower their monthly bills in many cases, and allow them to comparison shop for energy. The smart grid will also allow utilities to more easily integrate renewable energy sources, such as wind power, advocates say.

Consumers may be worrying too much about dynamic electricity pricing, Leiberman said. "The real value proposition for customers is the 95 percent of the hours where the prices in the electricity market are far lower than they're being charged," he said. "Until regulators and companies start talking about the real value proposition, I don't see why anybody would do this."

The Maryland PSC noted that BGE's smart meter deployment would cost $835 million, including $482 million during the initial rollout.

"Although we share BGE's (and others') hopes, and even enthusiasm, for the long-run potential and importance of the infrastructure upgrades known colloquially as the 'smart grid,' we find the business case for this proposal untenable," commissioners wrote in their June order. "The proposal asks BGE's ratepayers to take significant financial and technological risks and adapt to categorical changes in rate design, all in exchange for savings that are largely indirect, highly contingent and a long way off. We are not persuaded that this bargain is cost-effective or serves the public interest, at least not in its current form."

Utilities need to provide additional equipment beyond simple smart meters that allow customers to measure their electricity use and give them some control, said Karen Ehrhardt-Martinez, senior research associate at the Renewable and Sustainable Energy Institute at the University of Colorado. More education programs about the smart grid are also needed, she said.

Many electricity customers want to save money and want to help protect the environment by using renewable energy, she said. "People are ready to do their part, but they don't know what to do," Ehrhardt-Martinez added.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantusG. Grant's e-mail address is grant_gross@idg.com.

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