California Residents Feel Cheated by ‘Smart Meters’

Published December 28, 2009

Residents in and around Bakersfield, California are blaming faulty “smart meters” for shockingly higher energy bills, sparking a debate about whether governments and utilities should rely so heavily on technology that can be not only wrong but intrusive.

“We need policies that set parameters for market players to operate,” said Sascha Meinrath, research director of the Washington, DC-based New America Foundation. “Clearly, customer privacy needs to be at the foundation of these laws and likewise needs to cover a widening array of new technologies.

“Otherwise, some of the most useful tools we’re likely to see in coming years may end up creating incredibly negative repercussions for their users,” he said.

Claims of Big Mistakes
For the last three years, Pacific Gas & Electric Co. (PG&E) has been installing digital “smart meters” at millions of homes in northern and central California. The company says it wants to install a total of 10 million by the end of 2012. The new meters send real-time information to the San Francisco-based utility, supposedly allowing the company more accurate tracking of when customers use energy, to identify “peak times” and times when there is less stress on the grid.

The new “smart meter” plan was approved by the California Public Utilities Commission (CPUC), a state agency.

Last summer, however, some PG&E customers noticed alarming and puzzling spikes in their electric bills. A Central Valley farmer told the San Francisco Chronicle he was charged $11,857 for running a piece of equipment that he never turned on. At a hearing before the California legislature, another customer claimed PG&E sent her a $500 utility bill for July, when she reportedly was visiting family out of state and had almost every appliance in her home shut off.

Utility Denies Errors

Customers who claim they were falsely overcharged have joined a class-action lawsuit against PG&E. The utility says it has investigated hundreds of complaints and found the smart meters were not to blame. The bills were higher, PG&E says, because of a combination of regularly scheduled rate increases and a hotter-than-normal summer that led to increased air conditioning use.

The CPUC also stands behind the performance of the new meters.

“The CPUC has authorized the state’s investor-owned utilities to replace conventional customer electric meters with smart meters because they represent an integral part of the state’s ‘demand response’ efforts,” said Terrie Prosper, director of the news and public information office at the CPUC. The technology will be a net plus for the utility and consumers, Prosper added.

“Demand-response programs allow consumers and businesses to reduce [electricity] use during times of high energy demand. [Smart meters] allow utility customers to access their energy usage on a real-time basis, rather than receiving such information at the end of a billing cycle,” she said.

Too ‘Smart’?
Meinrath says smart meters can be useful as long as the technology is reliable and the data a utility collects is used narrowly and is properly protected.

“Smart meters are a powerful tool that could be used to empower customers with the information they need to better control their energy use,” Meinrath said. “But they can also be used to look into people’s private lives in ways that are highly invasive.

“Privacy protections in the United States are woefully antiquated and have not kept pace with technological innovations,” he added. “Smart meters exemplify this problem. As with any new technology, companies need to proof-out the hardware, determining how to boost reliability and accuracy, and identify how to roll these systems out more widely.”

Seen As Useful Tool
Steven Titch, a policy analyst at the Reason Foundation, says the benefits of smart meters outweigh the drawbacks, but consumers must be vigilant and hold utilities and government agencies accountable for abuses.

“If smart meters are limited to measuring electric use for billing, they are simply automating a labor-intensive process that exists already,” Titch said. “I also have no problem with power companies aggregating information from users to determine more accurate patterns in peak and off-peak usage. That means they can do a better job at matching supply and demand for electricity. This results in more efficient operation and savings.

“To me, this is not much different from a retailer who uses technology to track the sales of specific items in order to make sure the shelves are stocked,” he added. “That’s not to say the data collection capabilities of smart meters don’t tempt some governments to use them to engineer ‘desired’ behavior. That’s the problem—restraining governmental enthusiasm to use them to regulate individual behavior. But that is a danger with any new technology.”

‘Rush’ to Adopt
In addition to avoiding the governmental temptation to nanny, Titch says governments and utilities should be careful not to “rush to embrace a technology without fully understanding its costs or challenges. Just like with municipal broadband, there’s an element of magical thinking along the lines of ‘all we have to do is install this gadget and our complex social, economic, and environmental problems will be solved.’ ” Titch said.

“Since smart meters use the Internet, there needs to be adequate security safeguards in place,” he added. “Any point of network connectivity is a potential hack point. Put 100 poorly secured smart meters in a development, and you’ve got 100 points of security vulnerability.”

Tabassum Rahmani ([email protected]) writes from Dublin, California.